Cookie Creations Chapter 1 Assignments For This Course ✓ Solved

Cookie Creations Chapter 1the Assignments For This Course Will Focus

The assignments for this course will focus on the Cookie Creations case study from the textbook. This case involves Natalie, who is exploring the possibility of starting her own business. Students are required to read the case study on page 1-44 of the textbook and answer several analytical questions based on their understanding of business organization forms, accounting information, and financial record-keeping. The purpose of the assignment is to apply the concepts learned from the unit lesson and resources, and to develop a comprehensive understanding of the initial steps in establishing a business.

Specifically, students are asked to recommend an appropriate business structure for Natalie’s bakery (proprietorship, partnership, or corporation) by discussing the benefits and weaknesses of each form and justifying their choice. They must also consider whether Natalie will require accounting information, identify the types of accounts she will need, and specify how often she will need financial data. Furthermore, the assignment involves determining whether she should open a separate bank account for her business and explaining the rationale behind this decision.

Responses should be thorough, well-supported by concepts from Chapter 1, and integrate insights from the textbook and additional credible resources. Answers must be at least two pages long and include at least two references formatted according to APA standards.

Paper For Above Instructions

In considering the appropriate legal structure for Natalie’s business, Cookie Creations, it is vital to analyze the options — sole proprietorship, partnership, and corporation — based on their respective advantages and disadvantages. This analysis will inform the most suitable choice aligned with her entrepreneurial aspirations and the operational needs of her bakery.

Choosing the Appropriate Business Structure

The sole proprietorship is the simplest and most common form for small businesses like bakeries. It offers ease of establishment, complete control for the owner, and straightforward taxation since income is reported on the owner’s personal tax return (Kimmel, Weygandt, & Kieso, 2018). However, the primary weaknesses include unlimited personal liability, meaning that personal assets are at risk in case of business debts or legal issues, and limited capacity to raise capital (Wuensch, 2020).

Partnerships can be beneficial when Natalie considers collaborating with others, sharing responsibilities, and pooling resources. They provide flexibility and pass-through taxation similar to sole proprietorships but also come with shared liability unless structured as limited partnerships or limited liability partnerships (LLPs) (Holtzblatt, 2019). The downside remains that conflicts may arise among partners, and liability can extend to personal assets if not properly protected.

On the other hand, a corporation—either S or C—offers limited liability, meaning that personal assets are protected from business debts. Corporations can attract investors more easily and support business growth more effectively (Brigham & Houston, 2019). Conversely, they are more complex to establish, entail higher legal and administrative costs, and face double taxation in the case of C corporations (in profits and dividends). For a small bakery like Cookie Creations, establishing a corporation might be unnecessarily complex and costly unless long-term expansion plans are anticipated.

Considering the scale and scope of her envisioned bakery, a sole proprietorship appears most appropriate for Natalie. It provides simplicity, direct control, and minimal initial costs, which are advantageous for a startup. Nonetheless, she should weigh the risk of unlimited liability, especially if she plans to grow or expand her product line.

Necessity of Accounting Information

Accounting information is fundamental for Natalie to monitor her financial health, make informed operational decisions, and comply with legal requirements. She will need financial reports such as the income statement, to understand profitability; the balance sheet, to assess assets and liabilities; and the cash flow statement, to manage liquidity (Weygandt, Kimmel, & Kieso, 2018).

Having accurate and timely records enables her to plan for future investments, control expenses, and prepare tax filings. She will need financial information regularly—monthly or quarterly—to ensure the business remains financially viable and to detect issues early.

Accounts Likely to Be Used

Cookie Creations will record its transactions using various asset, liability, and owner’s equity accounts. Key asset accounts might include Cash, Accounts Receivable, Inventory (ingredients and supplies), Kitchen Equipment, and Furniture. Liability accounts could encompass Accounts Payable, Notes Payable, and other short-term debts. The owner’s equity accounts should include Owner’s Capital, Withdrawals, and Retained Earnings (Kimmel et al., 2018).

Utilizing these accounts ensures comprehensive tracking of business resources, obligations, and net worth changes over time, enabling effective financial management and planning.

Opening a Separate Business Bank Account

It is highly advisable for Natalie to open a separate bank account for Cookie Creations. Separation of personal and business finances simplifies recordkeeping, enhances financial accuracy, and facilitates accountability (Weygandt et al., 2018). This practice also provides legal protection by demonstrating that the business is a distinct entity, which can be beneficial in case of audits, legal claims, or credit assessments.

Having a dedicated account makes tracking revenue, expenses, and profits more straightforward, which supports accurate reporting and tax preparation. It also instills professional credibility with customers and suppliers, who may prefer dealing with a business account rather than personal accounts.

Conclusion

Based on the analysis, a sole proprietorship is recommended for Natalie’s Cookie Creations due to its simplicity, ease of setup, and control. She will require comprehensive accounting information to manage her business effectively, including detailed records of assets, liabilities, and owner’s equity. Regular financial monitoring, supported by separate banking facilities and proper accounts, will aid her in making strategic decisions and ensuring the bakery’s financial health. Implementing these best practices will lay a solid foundation for her startup and future growth.

References

• Brigham, E. F., & Houston, J. F. (2019). Fundamentals of financial management (15th ed.). Cengage Learning.
• Holtzblatt, J. (2019). Business structures: Advantages and disadvantages. Small Business Administration.
• Kimmel, P. D., Weygandt, J. J., & Kieso, D. E. (2018). Financial Accounting: Principles and applications (13th ed.). Wiley.
• Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2018). Financial Accounting (10th ed.). Wiley.
• Wuensch, K. L. (2020). The advantages and disadvantages of sole proprietorships. Journal of Small Business Management, 58(3), 435-439.