Question

As of December 31, Cookie Creations’ year-end, the following adjusting entry data are provided.

1. A count reveals that $45 of brochures and posters (supplies) were used.

2. Depreciation is recorded on the baking equipment purchased in November. The baking equipment has a useful life of 5 years. Assume that 2 months’ worth of depreciation is required.

3. Amortization (which is similar to depreciation) is recorded on the website. (Credit the Website account directly for the amount of the amortization.) The website is amortized over a useful life of 2 years and was available for use on December 1.

4. Interest on the note payable is accrued. (Assume that 1.5 months of interest accrued during November and December.) Round to nearest dollar.

5. One month’s worth of insurance has expired.

6. Natalie is unexpectedly telephoned on December 28 to give a cookie class at the neighborhood community center on December 31. In early January Cookie Creations sends an invoice for $450 to the community center.

7. A count reveals that $1,025 of baking supplies were used.

8. A cell phone invoice is received for $75. The invoice is for services provided during the month of December and is due on January 15.

9. Because the cookie-making class occurred unexpectedly on December 31 and is for such a large group of children, Natalie’s assistant helps out. Her assistant worked 7 hours at a rate of $8 per hour.

10. An analysis of the unearned revenue account reveals that two of the five classes paid for by the local school board on December 9 still have not been taught by the end of December. The $60 deposit received on December 19 for another class also remains unearned.

November Trial Balance:

COOKIE CREATIONS INC.

                                                                     Trial Balance

                                                               November 30, 2017                         

                                                                                                                     

                                                                                                                                         Debit     Credit  

            Cash................................................................................................... $   340

            Accounts Receivable....................................................................................................... 300

            Supplies.............................................................................................. 220

            Prepaid Insurance........................................................................................................ 1,200

            Equipment........................................................................................... 1,200

            Website............................................................................................... 600

            Accounts Payable...........................................................................................................                          $   650

            Unearned Service Revenue..........................................................................................................                          60

            Notes Payable...........................................................................................................                          2,000

            Common Stock    ........................................................................................................... 800

            Service Revenue..........................................................................................................                          400

            Utilities Expense..........................................................................................................                       50            

                                                                                                                                       $3,910 $3,910

Instructions Using the information gathered from above and from the November trial balance, do the following:

(c) Prepare a trial balance at December 31, 2017.

Solution for A:

General Journal
Date	Description (Account Name)	Debit	Credit
1-Dec	No Journal entry required
5-Dec	Cash	90
	Unearned Service Revenue	60
	Service Revenue A/c		150
	(To record the cash earned)
8-Dec	Cash	300
	Accounts Receivable		300
	(To record cash Received from receivables)
9-Dec	Cash	750
	Unearned Service Revenue		750
	(To record cash Earned from the revenue)
15-Dec	Accounts Payable	50
	Cash		50
	(To record Cash payable)
16-Dec	Accounts Payable	600
	Cash A/c		600
	(To record cash payable)
19-Dec	Cash	60
	Unearned Service Revenue		60
	(To record cash Earned from the revenue)
23-Dec	Cash	3,000
	Accounts Receivable	1,000
	Service Revenue		4,000
	(To record cash earned from the revenue booked)
23-Dec	Supplies	1,250
	Cash		1,250
	(To record supplies paid in cash)
23-Dec	Salaries and Wages Expense	800
	Cash		800
	(To record Salary payable)
28-Dec	Dividends	500
	Cash		500
	(To record dividend payable in cash)

Answer 1

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Adjusting Entries:
Date	Account	Debit	Credit
1	Supplies Expense	$             45
	Supplies		$             45
2	Depreciation Expense	$             40		1200/5*2/12
	Accumulated Depreciation		$             40
3	Amortization Expense	$             25		600/24
	Website		$             25
4	Interest Expense	$             15		2000*6%*1.5/12
	Interest Payable		$             15
	(assuming interest rate 6%)
5	Insurance Expense	$           100		1200/12
	Prepaid Insurance		$           100
6	Accounts Receivable	$           450
	Service Revenue		$           450
7	Baking Supplies Expense	$        1,025
	Baking Supplies		$        1,025
8	Utilities Expense	$             75
	Accounts Payable		$             75
9	Salaries and Wages Expense	$             56
	Salaries and Wages Payable		$             56
10	Unearned Service Revenue	$           450		750/5*3
	Service Revenue		$           450