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After establishing their companys fiscal year-end to be October 31, Natalie and Curtis began operating Cookie & Coffee Creations Inc. on November 1, 2018. The company had the following selected transactions during its first fiscal year of operations.

Jan. 1		Issued an additional 800 preferred shares to Natalies brother for $4,000 cash.
June 30		Repurchased 750 shares issued to the lawyer, for $500 cash. The lawyer had decided to retire and wanted to liquidate all of her assets.
Oct. 15		The company had a very successful first year of operations and as a result declared dividends of $28,000, payable November 15, 2019. (Indicate the amounts payable to the preferred stockholders and to the common stockholders.)
Oct. 31		The company earned revenues of $472,500 and incurred expenses of $416,500 (including the $750 legal expense from November 1 but excluding income tax). Record income tax expense, assuming the company has a 20% income tax rate.

Partially correct answer iconYour answer is partially correct.

Prepare the journal entries to record each of the above transactions. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date	Account Titles and Explanation	Debit	Credit
Jan. 1June 30Oct. 15Oct. 31	CashCash DividendsDividends PayableCommonDividends PayablePreferredExpensesIncome SummaryIncome Tax ExpenseIncome Tax PayablePreferred StockRetained EarningsRevenuesTreasury Stock
	CashCash DividendsDividends PayableCommonDividends PayablePreferredExpensesIncome SummaryIncome Tax ExpenseIncome Tax PayablePreferred StockRetained EarningsRevenuesTreasury Stock
Jan. 1June 30Oct. 15Oct. 31	CashCash DividendsDividends PayableCommonDividends PayablePreferredExpensesIncome SummaryIncome Tax ExpenseIncome Tax PayablePreferred StockRetained EarningsRevenuesTreasury Stock
	CashCash DividendsDividends PayableCommonDividends PayablePreferredExpensesIncome SummaryIncome Tax ExpenseIncome Tax PayablePreferred StockRetained EarningsRevenuesTreasury Stock
Jan. 1June 30Oct. 15Oct. 31	CashCash DividendsDividends PayableCommonDividends PayablePreferredExpensesIncome SummaryIncome Tax ExpenseIncome Tax PayablePreferred StockRetained EarningsRevenuesTreasury Stock
	CashCash DividendsDividends PayableCommonDividends PayablePreferredExpensesIncome SummaryIncome Tax ExpenseIncome Tax PayablePreferred StockRetained EarningsRevenuesTreasury Stock
	CashCash DividendsDividends PayableCommonDividends PayablePreferredExpensesIncome SummaryIncome Tax ExpenseIncome Tax PayablePreferred StockRetained EarningsRevenuesTreasury Stock
Jan. 1June 30Oct. 15Oct. 31	CashCash DividendsDividends PayableCommonDividends PayablePreferredExpensesIncome SummaryIncome Tax ExpenseIncome Tax PayablePreferred StockRetained EarningsRevenuesTreasury Stock
	CashCash DividendsDividends PayableCommonDividends PayablePreferredExpensesIncome SummaryIncome Tax ExpenseIncome Tax PayablePreferred StockRetained EarningsRevenuesTreasury Stock

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Solution

Partially correct answer iconYour answer is partially correct.

Prepare all of the closing entries required on October 31, 2019. (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 0 for the amounts.)

Date	Account Titles and Explanation	Debit	Credit
Oct. 31	CashCash DividendsDividends PayableCommonDividends PayablePreferredExpensesIncome SummaryIncome Tax ExpenseIncome Tax PayablePreferred StockRetained EarningsRevenuesTreasury Stock
	CashCash DividendsDividends PayableCommonDividends PayablePreferredExpensesIncome SummaryIncome Tax ExpenseIncome Tax PayablePreferred StockRetained EarningsRevenuesTreasury Stock
	(To close revenue account)
Oct. 31	CashCash DividendsDividends PayableCommonDividends PayablePreferredExpensesIncome SummaryIncome Tax ExpenseIncome Tax PayablePreferred StockRetained EarningsRevenuesTreasury Stock
	CashCash DividendsDividends PayableCommonDividends PayablePreferredExpensesIncome SummaryIncome Tax ExpenseIncome Tax PayablePreferred StockRetained EarningsRevenuesTreasury Stock
	CashCash DividendsDividends PayableCommonDividends PayablePreferredExpensesIncome SummaryIncome Tax ExpenseIncome Tax PayablePreferred StockRetained EarningsRevenuesTreasury Stock
	(To close expense accounts)
Oct. 31	CashCash DividendsDividends PayableCommonDividends PayablePreferredExpensesIncome SummaryIncome Tax ExpenseIncome Tax PayablePreferred StockRetained EarningsRevenuesTreasury Stock
	CashCash DividendsDividends PayableCommonDividends PayablePreferredExpensesIncome SummaryIncome Tax ExpenseIncome Tax PayablePreferred StockRetained EarningsRevenuesTreasury Stock
	(To close net income / (loss))
Oct. 31	CashCash DividendsDividends PayableCommonDividends PayablePreferredExpensesIncome SummaryIncome Tax ExpenseIncome Tax PayablePreferred StockRetained EarningsRevenuesTreasury Stock
	CashCash DividendsDividends PayableCommonDividends PayablePreferredExpensesIncome SummaryIncome Tax ExpenseIncome Tax PayablePreferred StockRetained EarningsRevenuesTreasury Stock
	(To close dividends)

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List of Accounts

Partially correct answer iconYour answer is partially correct.

Prepare the retained earnings statement for the year ended October 31, 2019. (List items that increase retained earnings first. Do not leave any answer field blank. Enter 0 for amounts.)

COOKIE & COFFEE CREATIONS INC. Retained Earnings Statement For the Year Ended October 31, 2019For the Month Ended October 31, 2019October 31, 2019
Balance, November 1, 2018Balance, October 31, 2019Cash DividendsCommonCash DividendsPreferredDividendsExpensesNet Income / (Loss)RevenuesTotal ExpensesTotal Revenues		$
AddLess: Balance, November 1, 2018Balance, October 31, 2019Cash DividendsCommonCash DividendsPreferredDividendsExpensesNet Income / (Loss)RevenuesTotal ExpensesTotal Revenues
AddLess:
Balance, November 1, 2018Balance, October 31, 2019Cash DividendsCommonCash DividendsPreferredDividendsExpensesNet Income / (Loss)RevenuesTotal ExpensesTotal Revenues	$
Balance, November 1, 2018Balance, October 31, 2019Cash DividendsCommonCash DividendsPreferredDividendsExpensesNet Income / (Loss)RevenuesTotal ExpensesTotal Revenues
Balance, November 1, 2018Balance, October 31, 2019Cash DividendsCommonCash DividendsPreferredDividendsExpensesNet Income / (Loss)RevenuesTotal ExpensesTotal Revenues		$

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