CCC5

CONTINUING COOKIE CHRONICLE

(a) Responses to Natalies questions

1. The mixers should be classified as inventory as they are for resale.
2. A perpetual inventory system will provide better control over
inventory. Because you are dealing with high-value items you should
use the perpetual system.
3. You still need to count inventory to ensure that your records are
accurate and that the inventory that is supposed to be on hand is
actually there. I suggest you should count the inventory once a
month.
(b)
Date

GENERAL JOURNAL
Account Titles and Explanation

Jan. 4

12

12

J1
Debit

Merchandise Inventory ......................................

Accounts Payable ..........................................

2,875

Merchandise Inventory ......................................

Cash....................................................................

100

Accounts Payable [($2,875 5) + $20] .........

Merchandise Inventory.................................

595

Cash .........................................................................
Accounts Receivable ....................................

375

Accounts Receivable .........................................

Sales...................................................................

3,450

Cost of Goods Sold ($595 X 3) ........................

Merchandise Inventory.................................

1,785

Copyright 2009 John Wiley & Sons, Inc.

Credit

2,875

100

595

375

3,450

Weygandt, Accounting Principles, 9/e, Continuing Cookie Chronicles

1,785

(For Instructor Use Only)

5-1

CCC5 (Continued)
(b) (Continued)
Jan. 14

14

17

18

20

20

28

28

30

31

31

Freight-Out...................................................
Cash..........................................................

75

Merchandise Inventory ............................

Accounts Payable ................................

2,300

Cash ...............................................................
N. Koebel, Capital.................................

1,000

Merchandise Inventory ............................

Cash..........................................................

80

Cash ...............................................................
Sales.........................................................

2,300

Cost of Goods Sold ($595 X 2) ..............

Merchandise Inventory.......................

1,190

Salaries Expense .......................................

Salaries Payable ........................................
Cash..........................................................

160
56

Cash ...............................................................
Accounts Receivable ..........................

3,450

Accounts Payable .....................................

Telephone Expense ..................................
Cash..........................................................

75
70

Accounts Payable
($2,875 $595 + $2,300)......................
Cash..........................................................

75

2,300

1,000

80

2,300

1,190

216

3,450

145

4,580

N. Koebel, Drawings .................................

Cash..........................................................

Copyright 2009 John Wiley & Sons, Inc.

Weygandt, Accounting Principles, 9/e, Continuing Cookie Chronicles

4,580
750
750

(For Instructor Use Only)

5-2

CCC5 (Continued)
(b) and (d)

Date

Explanation

Jan. 1 Balance
6
8
14
17
18
20
28
28
30
31
31

Date

Explanation

Jan. 1 Balance
8
12
28

Date

Explanation

Jan. 4
6
7
12
14
18
20

Copyright 2009 John Wiley & Sons, Inc.

Cash
Ref.


J1
J1
J1
J1
J1
J1
J1
J1
J1
J1
J1

Debit

J1
J1
J1
J1
J1
J1
J1

145
4,580
750

Credit

Balance

375
75
1,000
80
2,300
216
3,450

3,450

875
500
3,950
500

Credit

Balance

375
3,450

Merchandise Inventory
Ref.
Debit

Balance
1,180
1,080
1,455
1,380
2,380
2,300
4,600
4,384
7,834
7,689
3,109
2,359

100

Accounts Receivable
Ref.
Debit


J1
J1
J1

Credit

2,875
100
595
1,785
2,300
80
1,190

Weygandt, Accounting Principles, 9/e, Continuing Cookie Chronicles

2,875
2,975
2,380
595
2,895
2,975
1,785

(For Instructor Use Only)

5-3

CCC5 (Continued)
(b) and (d) (Continued)
Baking Supplies
Ref.
Debit

Date
Explanation
Jan. 1 Balance

Jan. 1 Balance
31 Adjusting entry

Prepaid Insurance
Ref.
Debit


J2

Date
Explanation
Jan. 1 Balance

Baking Equipment
Ref.
Debit

Date

Explanation

Credit

Balance
350

Credit

Balance

110

1,210
1,100

Credit

Accumulated depreciationBaking Equipment

Date
Explanation
Ref.
Debit
Credit


Jan. 1 Balance
31 Adjusting entry
J2
20

Date
Explanation
Jan. 1 Balance
4
7
14
30
31

Copyright 2009 John Wiley & Sons, Inc.

Accounts Payable
Ref.
Debit


J1
J1
595
J1
J1
75
J1
4,580

Credit
2,875
2,300

Weygandt, Accounting Principles, 9/e, Continuing Cookie Chronicles

Balance
1,200

Balance
40
60

Balance
75
2,950
2,355
4,655
4,580
0

(For Instructor Use Only)

5-4

CCC5 (Continued)
(b) and (d) (Continued)

Date

Salaries Payable
Ref.
Debit

Explanation

J1

Jan. 1 Balance
28

Date

Date

Explanation

Explanation

Jan. 1 Balance
Date

Explanation

Jan. 1 Balance
17

Date

Explanation

Jan. 31

Copyright 2009 John Wiley & Sons, Inc.

J2

Notes Payable
Ref.
Debit


N. Koebel, Capital
Ref.
Debit


J1

N. Koebel, Drawings
Ref.
Debit
J1

Balance
300

Interest Payable
Ref.
Debit

Jan. 1 Balance
31 Adjusting entry

Date

Credit

Jan. 1 Balance

Balance
56
0

56

Unearned Revenue
Ref.
Debit

Explanation

Credit

Credit

Balance

10

15
25

Credit

Balance
2,000

Credit

Balance

1,000

2,329
3,329

Credit

Balance

750

Weygandt, Accounting Principles, 9/e, Continuing Cookie Chronicles

750

(For Instructor Use Only)

5-5

CCC5 (Continued)
(b) and (d) (Continued)

Date

Sales
Ref.

Explanation

Jan. 12
20

Date

J1
J1
Cost of Goods Sold
Ref.
Debit

Explanation

Jan. 12
20

Date

J1
J1

Explanation

J1

Jan. 30

J1

Explanation

Jan. 31

Adjusting entry

Explanation

Jan. 31

Adjusting entry

J2

3,450
5,750

Credit

Balance
1,785
2,975

Credit

Balance
160

Credit

Balance
70

Credit

20

Insurance Expense
Ref.
Debit

Date

Copyright 2009 John Wiley & Sons, Inc.

J2

3,450
2,300

70

Depreciation Expense
Ref.
Debit

Date

Balance

160

Telephone Expense
Ref.
Debit

Explanation

Credit

1,785
1,190

Salaries Expense
Ref.
Debit

Jan. 28

Date

Debit

Balance
20

Credit

110

Weygandt, Accounting Principles, 9/e, Continuing Cookie Chronicles

Balance
110

(For Instructor Use Only)

5-6

CCC5 (Continued)
(b) and (d) (Continued)

Date

Freight Out
Ref.
Debit

Explanation

Jan. 14

Date
Jan. 31

J1

Adjusting entry

Copyright 2009 John Wiley & Sons, Inc.

75

Interest Expense
Ref.
Debit

Explanation

J2

Credit

Balance
75

Credit

10

Weygandt, Accounting Principles, 9/e, Continuing Cookie Chronicles

Balance
10

(For Instructor Use Only)

5-7

CCC5 (Continued)
(c)
Cookie Creations
Trial Balance
January 31, 2010
Cash.........................................................................................
Accounts Receivable .........................................................
Merchandise Inventory......................................................
Baking Supplies...................................................................
Prepaid Insurance...............................................................
Baking Equipment ..............................................................
Accumulated DepreciationBaking Equipment ......
Accounts Payable ...............................................................
Salaries Payable ..................................................................
Unearned Revenue .............................................................
Interest Payable ...................................................................
Notes Payable ......................................................................
N. Koebel, Capital................................................................
N. Koebel, Drawings...........................................................
Sales........................................................................................
Cost of Goods Sold ............................................................
Salaries Expense.................................................................
Telephone Expense............................................................
Depreciation Expense .......................................................
Insurance Expense .............................................................
Freight Out ............................................................................
Interest Expense..................................................................

Debit
$ 2,359
500
1,785
350
1,210
1,200

40

300
15
2,000
3,329
750
5,750
2,975
160
70

75
$11,434

Copyright 2009 John Wiley & Sons, Inc.

Credit

Weygandt, Accounting Principles, 9/e, Continuing Cookie Chronicles

$11,434

(For Instructor Use Only)

5-8

CCC5 (Continued)
(d)
Date

GENERAL JOURNAL
Account Titles and Explanation

J2
Debit

Jan. 31 Depreciation Expense.................................

Accumulated Depreciation
Baking Equipment..............................
($1,200 60 months)

20

31 Interest Expense ...........................................

Interest Payable .......................................
($2,000 X 6% X 1/12)

10

31 Insurance Expense ......................................

Prepaid Insurance...................................

110

Copyright 2009 John Wiley & Sons, Inc.

Credit

20

10

Weygandt, Accounting Principles, 9/e, Continuing Cookie Chronicles

110

(For Instructor Use Only)

5-9

CCC5 (Continued)
(e)
Cookie Creations
Adjusted Trial Balance
January 31, 2010
Cash........................................................................................
Accounts Receivable ........................................................
Merchandise Inventory.....................................................
Baking Supplies..................................................................
Prepaid Insurance..............................................................
Baking Equipment .............................................................
Accumulated DepreciationBaking Equipment .....
Accounts Payable ..............................................................
Unearned Revenue ............................................................
Interest Payable ..................................................................
Notes Payable .....................................................................
N. Koebel, Capital...............................................................
N. Koebel, Drawings..........................................................
Sales.......................................................................................
Cost of Goods Sold ...........................................................
Salaries Expense................................................................
Telephone Expense...........................................................
Depreciation Expense ......................................................
Insurance Expense ............................................................
Freight-Out ...........................................................................
Interest Expense.................................................................

Copyright 2009 John Wiley & Sons, Inc.

Debit
$ 2,359
500
1,785
350
1,100
1,200

Credit

60
300
25
2,000
3,329

750
5,750
2,975
160
70
20
110
75
10
$11,464

Weygandt, Accounting Principles, 9/e, Continuing Cookie Chronicles

$11,464

(For Instructor Use Only)

5-10

CCC5 (Continued)
(f)
COOKIE CREATIONS
Income Statement
Month ended January 31, 2010
Sales...............................................................................................
Cost of goods sold ....................................................................
Gross profit ..................................................................................
Operating expenses
Salaries expense...................................................................
Insurance expense ...............................................................
Freight-out...............................................................................
Telephone expense ..............................................................
Depreciation expense..........................................................
Total operating expenses .............................................
Income from operations...........................................................
Other expenses
Interest expense....................................................................
Net income ...................................................................................

Copyright 2009 John Wiley & Sons, Inc.

Weygandt, Accounting Principles, 9/e, Continuing Cookie Chronicles

$5,750
2,975
2,775
$160
110
75
70
20
435
2,340
10
$2,330

(For Instructor Use Only)

5-11