Chapter 5

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..........................................................
4,580
750
750
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
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
2,875
2,975
2,380
595
2,895
2,975
1,785
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
Accounts Payable
Ref.
Debit

J1
J1
595
J1
J1
75
J1
4,580
Credit
2,875
2,300
Balance
1,200
Balance
40
60
Balance
75
2,950
2,355
4,655
4,580
0
5-4
CCC5 (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

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
750
5-5
CCC5 (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
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
Balance
110
5-6
CCC5 (Continued)
Date
Freight Out
Ref.
Debit
Explanation
Jan. 14
Date
Jan. 31
J1
Adjusting entry
75
Interest Expense
Ref.
Debit
Explanation
J2
Credit
Balance
75
Credit
10
Balance
10
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
Credit
$11,434
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
Credit
20
10
110
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.................................................................
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
$11,464
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 ...................................................................................
$5,750
2,975
2,775
$160
110
75
70
20
435
2,340
10
$2,330
5-11

Chapter 5

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CCC5

CONTINUING COOKIE CHRONICLE

(a) Responses to Natalies questions

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

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

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

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

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

Copyright 2009 John Wiley & Sons, Inc.

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

(For Instructor Use Only)

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

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

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

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

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

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

Copyright 2009 John Wiley & Sons, Inc.

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

(For Instructor Use Only)

Copyright 2009 John Wiley & Sons, Inc.

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

(For Instructor Use Only)

Accumulated depreciationBaking Equipment

Copyright 2009 John Wiley & Sons, Inc.

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

(For Instructor Use Only)

Copyright 2009 John Wiley & Sons, Inc.

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

(For Instructor Use Only)

Copyright 2009 John Wiley & Sons, Inc.

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

(For Instructor Use Only)

Copyright 2009 John Wiley & Sons, Inc.

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

(For Instructor Use Only)

Copyright 2009 John Wiley & Sons, Inc.

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

(For Instructor Use Only)

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

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

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

Copyright 2009 John Wiley & Sons, Inc.

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

(For Instructor Use Only)

Copyright 2009 John Wiley & Sons, Inc.

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

(For Instructor Use Only)

Copyright 2009 John Wiley & Sons, Inc.

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

(For Instructor Use Only)

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