Your answer is partially correct.Prepare the journal entries required on November 1, 2024, the date when Natalie and Curtis transfer the assets of their respective businesses into Cookie & Coffee Creations Inc. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debitentries before credit entries)Date Account Titles and ExplanationNov. 1CeahAccounts ReceivableInventoryEquipmentNov. 1Common StockList of Accounts* Your answer is incorrect.Date Account Titles and ExplanationDebitCommon Stock7,500Debit100450Assume that Cookie & Coffee Creations Inc. issues 1,000 $6 cumulative preferred shares to Curtis' Dad and the same number to Natalie's grandmother, in both cases for $5,000Prepare the journal entry required for this transaction that also occurred on November 1. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.)2,500Credit5,00010,550Credit5,000 Because Natalie has been successful with Cookie Creations and Curtis has been just as successful with his coffee shop, they both conclude that they could benefit from each other's business expertise. Curtis and Natalie next evaluate the different types of businessorganization, and because of the advantage of limited personal liability, decide to form a new corporation.Curtis has operated his coffee shop for 2 years. He buys coffee, muffins, and cookies from a local supplier. Natalie's business consists of giving cookie-making classes and selling fine European mixers. The plan is for Natalie to use the premises Curtis currently rents as a locationfor her cookie-making classes and demonstrations of the mixers that she sells. Natalie will also hire, train, and supervise staff hired to bake cookies and muffins sold in the coffee shop. By offering her classes on the premises, Natalie will save on travel, and the coffee shop willprovide one central location for selling the mixers. Combining forces will also allow Natalie and Curtis to pool their resources and buy a few more assets to run their new business venture.The current market values of the assets of both businesses are as follows.DescriptionCashAccounts receivableCurtis' Coffee Cookie Creations$7,500100114502,500$10,550InventoryEquipment$12,0005001,1301,000$14,630Curtis and Natalie meet with a lawyer and form their corporation, called Cookie & Coffee Creations Inc., on November 1, 2024. The new corporation is authorized to issue 50,000 shares of $1 par common stock and 10,000 shares of no par, $6 cumulative preferred stock.The assets held by each business will be transferred into the corporation at current market value of $1 per share. Curtis will receive 10,550 common shares, and Natalie will receive 14,630 common shares in the corporation.

Journal entry It is a record of a business transactions in the business books. In double-entry…

Answered: Because Natalie has been so successful…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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While James Craig and his former classmate Paul Dolittle both studied accounting at school, they ended up pursuing careers in professional cake decorating. Their company, Good to Eat (GTE), specializes in custom-sculpted cakes for weddings, birthdays, and other celebrations. James and Paul formed the business at the beginning of 2022, and each contributed $60,000 in exchange for a 50 percent ownership interest. GTE also borrowed $240,000 from a local bank. Both James and Paul had to personally guarantee the loan. Both owners provide significant services for the business. The following information pertains to GTE's 2022 activities: GTE uses the cash method of accounting (for both book and tax purposes) and reports income on a calendar-year basis. GTE received $500,000 of sales revenue and reported $230,000 of cost of goods sold (it did not have any ending inventory). GTE paid $35,000 compensation to James, $35,000 compensation to Paul, and $45,000 of compensation to other employees…
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