Cookie Creations Chapter 4: This Assignment Is A Continuatio

Cookie Creations Chapter 4this Assignment Is A Continuation Of The C

Read the case information, and complete the actions listed below. Natalie had a very busy December. At the end of the month, after journalizing and posting the December transactions and adjusting entries, Natalie prepared the following adjusted trial balance. Using the information from the adjusted trial balance, complete the tasks below. Prepare an income statement and an owner’s equity statement for the 2 months ended December 31, 2019, and a classified balance sheet as of December 31, 2019.

The note payable has a stated interest rate of 6%, and the principal and interest are due on November 16, 2021. Natalie has decided that her year-end will be December 31, 2019. Prepare and post-closing entries as of December 31, 2019. Prepare a post-closing trial balance. Make sure to complete item “a” completely before moving to item “b,” and then move to item “c.” You cannot jump ahead unless you have completed each step sequentially in full.

Submit the Excel document in Blackboard upon completion.

Paper For Above instruction

The case of Cookie Creations emphasizes the importance of meticulous financial management and accurate record-keeping for small businesses. As a continuation of the earlier chapters, Chapter 4 tasks focus on practical application of accounting principles such as journalizing transactions, adjusting entries, and preparing financial statements. This exercise not only reinforces theoretical knowledge but also develops skills crucial for real-world financial analysis and reporting.

Understanding and managing financial data begins with correctly recording transactions. Journal entries capture all business activities, ensuring that each transaction is documented in proper accounts. Postings from journal to ledger facilitate the accumulation of balances necessary for preparing financial statements. Adjusting entries are equally critical—they incorporate accrued revenues, expenses, depreciation, and other necessary corrections to accurately reflect the company's financial position as of December 31, 2019.

The case specifies that Natalie prepared an adjusted trial balance, which serves as the foundation for creating financial statements. The income statement summarizes revenues and expenses, providing a clear view of profitability for the accounting period. The statement of owner’s equity details changes in the owner’s capital account, including investments, withdrawals, and net income or loss. The balance sheet then presents the company’s financial position at the specified date, classifying assets and liabilities into current and long-term categories.

Specific to this case, the note payable bears a 6% interest rate, with a due date of November 16, 2021. Recognizing interest expense and accrued interest up to December 31, 2019, is vital for accurate reporting. It exemplifies how accruing expenses aligns with the matching principle in accounting—matching expenses to the period in which they are incurred regardless of when payments are made.

Following the completion of financial statement preparation, closing entries are necessary to reset temporary accounts for the next accounting period. These entries close revenues and expenses to owner’s capital, ensuring that the accounts start afresh in the new cycle. Subsequently, a post-closing trial balance confirms that all temporary accounts have been closed and that the ledger is balanced, providing a reliable starting point for future transactions.

Overall, this case exercise integrates fundamental accounting tasks—transaction recording, adjustments, financial statement preparation, and closing procedures—which collectively underpin sound financial management practices. Mastery of these tasks ensures that small business owners like Natalie can make informed decisions based on accurate and timely financial information, ultimately supporting business sustainability and growth.

References

  • Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2019). Financial Accounting, (12th ed.). Wiley.
  • Horngren, C. T., Sundem, G. L., Elliott, J. A., & Philbrick, D. (2019). Introduction to Financial Accounting (11th ed.). Pearson.
  • Scott, W. R. (2017). Financial Accounting Theory (4th ed.). Pearson.
  • Shim, J. K., & Siegel, J. G. (2019). Financial Management and Accounting Fundamentals. McGraw-Hill Education.
  • Higgins, R. C. (2018). Financial Markets and Institutions (12th ed.). McGraw-Hill Education.
  • CPA Canada. (2020). Handbook of Financial Accounting Concepts. Canadian Professional Accountants.
  • The Institute of Management Accountants. (2021). IMA Statement of Ethical Practice. IMA Publications.
  • Gibson, C. H. (2018). Financial Reporting & Analysis (13th ed.). Cengage Learning.
  • Government Accountability Office. (2019). Financial Statement Restatements. GAO Publications.
  • AccountingTools. (2023). Adjusting Entries. https://www.accountingtools.com/articles/adjusting-entries.html

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