Continuing Cookie Chronicle
Continuing Cookie Chronicle
For unlimited access to Homework Help, a Homework+ subscription is required.
Related questions
Is this right?
Continuing Cookie Chronicle 1
Continuing Cookie Chronicle
Part 2 After establishing their companyâs fiscal year-end to be October 31, Natalie and Curtis began operating Cookie & Coffee Creations Inc. on November 1, 2015. The company had the following selected transactions during its first fiscal year of operations.
Jan. 1 Issued an additional 800 preferred shares to Natalieâs brother for $4,000 cash.
June. 30 Repurchased 750 shares issued to the lawyer, for $500 cash. The lawyer had decided to retire and wanted to liquidate all of her assets.
Oct. 15 The company had a very successful first year of operations and as a result declared dividends of $28,000, payable November 15, 2016. (Indicate the amounts payable to the preferred stockholders and to the common stockholders.)
Oct. 31 The company earned revenues of $472,500 and incurred expenses of $416,500 (including the $750 legal expense from November 1 but excluding income tax). Record income tax expense, assuming the company has a 20% income tax rate.
Instructions
(a) Prepare the journal entries to record each of the above transactions.
Date | Account Titles | Debit | Credit |
Jan. 1 | Cash | 4,000 | |
Preferred stock | 4,000 | ||
June. 30 | Treasury Stock | 500 | |
Cash | 500 | ||
Oct. 15 | Cash Dividends | 28,000 | |
Dividends Payable | 28,000 | ||
Oct. 31 | Income Tax Expense | 11,200 | |
Income Tax Payable | 11,200 | ||
(b) Prepare all of the closing entries required on October 31, 2016.
Date | Account Titles | Debit | Credit |
Oct. 31 | Sales Revenue | 472,500.00 | |
Income Summary | 472,500.00 | ||
Oct. 31 | Income Summary | 750 | |
Legal Expenses | 750 | ||
Oct. 31 | Income Summary | 28,000 | |
Dividend Expense | 28.000 | ||
Oct. 31 | Income Summary | 11,200 | |
Income Tax Expenses | 11,200 | ||
Oct. 31 | Income Summary | 16,800 | |
Retained Earrnings | 16,800 |
Classify the following costsincurred in the manufacturing of cookie bars as either (a)Product Cost- Direct Materials, (b)Product Cost- Conversion, or (c) PeriodCost (5 points).
Cost Incurred in Manufacturing of Cookies | Classification | |
a. | Depreciation on Automated Wrapping Machine | |
b. | Cookie Dough | |
c. | Peanut Butter | |
d. | Plant Managerâs Salary of $90,000 | |
e. | Overtime Pay of Production Workers | |
f. | Cost of Air Time for New Radio Advertising | |
g. | Salary of Plant Security Guard | |
h. | Salary of Company Controller | |
i. | Depreciation on Computers in Legal StaffOffice | |
j. | Manufacturing Departmentâs Allocation of CafeteriaCosts |