GB518_Unit4_Assignment

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THE COOKIE CREATIONS 1 The Cookie Creations Purdue University Global

THE COOKIE CREATIONS 2 Abstract With the use of financial accounting principles, we have examined the company start-up, “Cookie Creations.” There are five critical steps to maintaining a business: business, bookkeeping, inventory, in-house control, and credit choices. To be a merchant for a larger corporation, Biscuits has demonstrated being effective provides a chance to be a high-class supplier to sufficient mixers of Europe. It was analyzing inner control through John’s structure, and Natalie’s associate analyzes its flaws to produce developments in general. This paper will offer a breakdown of the rewards and drawbacks of loaning out credit to clientele based on their monetary statements. The end result will determine the practicality of Natalie starting Cookie Creations.

THE COOKIE CREATIONS 3 Introduction While growing up with her grandmother, Natalie Koebel learned the art of cookie- making. They enjoyed creating different types of cookies and discovering newer healthier and more delightful cookies. In college, Natalie contemplates the likelihood of opening a company. One of her friends knows the joy she gets from baking and contends Natalie should embrace cookies in this establishment. Reflecting on the fun she had with her grandma and all of the remembrances, she agrees to open Cookie Creations. CC1 Generating the Company Since Natalie is certain the type of business she desires for her company, there are various kinds of structures one’s company. Because of the proprietorship, Natalie will have taxes and liability, which determines the type of structured business she will have. It would be simple for Natalie to have sole proprietorship to get going and will provide her full control of her business. As a result, it is a couple of breakdowns to this, is that the company’s resources and liabilities are not detached from the individual assets and liabilities (Esch, Schnellbächer, & Wald, 2019). Natalie is accountable for the debt of the company if it nosedived. It is harder raising cash for anyone, because it is tough obtaining a loan from a bank as the sole owner and cannot trade stocks. Natalie, may also want to think about a (LLC) is a different structure that to reflect. Being an LLC, she may gain from together the company and corporation company structures. With Natalie being an LLC, the personal liabilities are secure if the company goes broke or has grievances contrary to it. Natalie can put the losses and profits through her individual earnings so she does not have to pay business tariffs, though, she must recompense independent tax offerings toward Social Security and Medicare.

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THE COOKIE CREATIONS 4 CC1 – Bookkeeping Information To keep the bookkeeping, Natalie must get an auditor, and so she can learn how to obtain the products that she ordered to create the cookies and additional products to pay the retailer. This is also recognized as accounts payable. If she will be delivering the products, the orders that go out to the consumers should be payable by them, which is identified as accounts receivable. Natalie must know how to construct the fiscal reports, ways to pay and keep records of the taxes, as well as bookkeeping. She will possibly require this info from day-to-day. With this data, Natalie can plan into the future, and estimate what she must order. This will allow her to observe what the cash requests are and discover innovative sales strategies. Natalie’s resources are what she orders to produce the cookies and what it requires to open the establishment to the customers like cash, computers, equipment, inventory, land, and accounts receivables. CC1 – Accounts of Cookie Creation Liabilities are things that Natalie will be in debt to additional merchants or banks or bank loans, accounts payable, customer deposits and mortgages. Income and revenue is cash that the company makes from the customers purchasing the cookies. Revenues will assist Natalie, on figuring out her accountant as well as the businesses disposable proceeds. Expenditures are expenses, that permit a business to function is assets, expenses, equity, liabilities, and revenue. A few of these explanations are rent, office supplies, and utilities. The expense and revenue accounts are just short-term accounts and are retuned to zero at each bookkeeping period’s end. It is true that Natalie must start a new bank account for the business. For Natalie’s business, there are more than a few explanations on why she should have a distinct business account. It appears more qualified for the company to have its personal bank account minus having Natalie’s name added (Esch, Schnellbächer, & Wald, 2019).

THE COOKIE CREATIONS 5 CC1 – Bank Account One key point is, if there is a great deal of cash to go through an individual account, the bank may close the account and enquire one to start-up a fresh business account. Having a business account allows the establishment to be able to obtain debit and credit card payments from clienteles, as well as borrow cash. Natalie may find it useful in using her own car for business purposes. In doing this, she has to subtract the business’s cost and not the entirety of together business and individual. Natalie must claim the business whole car deductions on taxes, which will reduce her taxes. CC1 – Parting of Personal Assets as well as Business The aim of a broad plan of asset protection is to avoid or considerably decrease risks by protecting the business and individual resources from the assertions of a creditor. Unluckily, many smaller-business proprietors are naïve of the likely jeopardies that may damage their company as well as the choices accessible to defend them. Asset protection plans uses lawful approaches, prior to proceedings or claim ascends, that may discourage a possible plaintiff or aid in preventing the seize of assets once a ruling is received. CC2 – Finance Statements Information In bookkeeping there are four diverse finance statements. They are the statement of cash flows, the income statement, retained earnings, as well as the balance sheet. The businesses income statement displays the company’s proceeds, expenditures, and net income. The retained earnings statement only displays the retained earnings.

THE COOKIE CREATIONS 6 CC2 – Finance Statements Required On the balance sheet it indicates the company’s total assets, liabilities, and stockholder’s equity. The statement of cash flows displays precisely where the money streams are and the cash at the periods end. Also, the balance sheet is the greatest statement for Natalie to observe if Biscuits will have adequate money to pay current liabilities. She must observe the assets they have and what they are indebted to in liabilities. This would make the cash flow statement be useful, as well as making her aware of the operational, capitalizing and funding acts for Biscuits. For the long-standing, Natalie must observe the statement of retained earnings. This will help her from starting and finishing quantity of Biscuits in a given period. Also, the income statement will display to Natalie what the net revenue is, minus the expenses and will show Natalie if there is any business productivity. Natalie could review the balance sheet if she wanted to observe Biscuits unresolved obligation and decide if they will be able to meet their interests and liability payments on the obligation they may incur. It will display the business’s current assets, which comprises cash, as well as receivables, with the secure assets in land, and buildings. To decide if Biscuits will have to pay dividends can be done through the income statement. Biscuit’s Dividends & Concerns of Biscuit’s Natalie must have a conversation with Biscuits bookkeeper, before going along with this chance, and gain historical finance statements and match it with the last years to the present. If there are things that Natalie does not comprehend, she may want to acquire a bookkeeper to evaluate the reports and provide comments on Biscuits.

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THE COOKIE CREATIONS 7 CC5 – Inventory Decisions When marketing products, the retailing course is a sequence of phases monitored by a sales assistant. The sell process is a whole series which help to identify the clienteles to concluding the deal. Products tracking and reports is the databank that store, track, and scans information for each package that has barcodes and added services. The scanned events occur from receipts to distribution. The continuous inventory system includes the endless modernizing of inventory accounts. These inform sales and acquisitions through electronic systems of point-of-sale as well as innovativeness asset management softwares. CC7 Part 1 – Internal Control Decisions John has offered to be Natalie’s accountant, and but he has discovered numerous inner control flaws. The key thing is John does everything alone with no one to check on him. It is unethi8cal that John holds cash in his vehicle, and just makes a deposits two times a month is unacceptable. A different person should make the deposits if John is recording the deposits. Natalie must sign the authorizations; because she is the proprietor and John must not write his individual check. Natalie must keep record of cash receipts and match them to the bank deposit. It will validate the cash coming in to the business is being deposited in the bank. Natalie, must also check to see if it is logged in the system by inspecting the finances each month, or have an external bookkeeper prepare it.

THE COOKIE CREATIONS 8 Here the balance sheet displays the cash in the current assets is $2,961.00. This is a balance of the bank statement as well as the bookkeeping once the changes were made. CC8 – Credit Decisions Natalie must see just how trustworthy her friend is. Looking at his finance statements will allow Natalie to view the asset amounts and liabilities he presently has, if his income allows him this credit. Natalie could discover the current ratio if she divides the current assets with the current liabilities. If it is at least 2:11, then Natalie will feel better about giving him credit. If the reports display he can pay in 30-days, this will let her know that she does not have anything to concerned about. The alternate to propose to Curtis aside of the 30-days, is to suggest a markdown for paying it off early. She could also suggest him a 10% markdown if he pays it off in two-weeks, and 20% if he can pay it off in one week. This may make him to discover the cash from elsewhere. There are more than a few of gains to acceptance credit and debit cards and the most significant is increasing sales (Kieso, Kimmel, & Weygandt, 2019).

THE COOKIE CREATIONS 9 Journal Entries June Date Account titles Debit Credit 1 No entry No entry 2 No entry No entry 30 Cash 873 Credit card fee 27 Credit card recievables 900 30 Rental expense 75 Cash 75 30 Notes receivable 1100 Accounts receivable 1100 July 15 Credit card receivable 1100 Sales revenue 1100 Cost of goods sold 600 Inventory 600 30 Cash 1200 Credit card receivables 1200 2400 31 Rental expense 75 Cash 75 31 Cash 2231 Credit card fees 69 Credit card receivables 2300 31 Interest receivable 5.5 Interest revenue 5.5

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THE COOKIE CREATIONS 10 Conclusion Starting out as a small girl, Natalie had an amazing time baking with her grandmother and making cookies for excitement. At a very young age, I am sure that Natalie never imagined that she would own a business and make the exact cookies that she and her grandmother use to make and still have fun doing it every day. Natalie does have many decisions to make, as well as bumps along the way, but with her willpower and her grandmother overseeing her, she will do just fine in running her business.

THE COOKIE CREATIONS 11 References Esch, M., Schnellbächer, B., & Wald, A. (2019). Does integrated reporting information influence internal decision making? An experimental study of investment behavior. Business Strategy & the Environment (John Wiley & Sons, Inc) , 28 (4), 599–610. https://doi.org/10.1002/bse.2267 Kieso, D.E., Kimmel, P.D., & Weygandt, J.J. (2019). Accounting: Tools for Business Decision- Making,7 th , Wiley. Shil, N., Hossain, M. N., & Ullah, M. N. (2019). Exploring the underlying factors affecting capital structure decision: A quantitative analysis. Journal of Corporate Accounting & Finance (Wiley), 30(4), 69–84. https://doi.org/10.1002/jcaf.22404 Sikidar, S., & Gautam, H. C. (2019). Financial Statement Analysis. New Central Book Agency. https://eds-a-ebscohost-com.libauth.purdueglobal.edu/eds/detail/detail? vid=1&sid=48ee4582-67e6-44dd-a295- 06d947011501%40sessionmgr4007&bdata=JnNpdGU9ZWRzLWxpdmU %3d#db=nlebk&AN=2239609