Continuing Cookie Chronicle
CCC1 Natalie Koebel spent much of her childhood learning the art of
cookie-making from her grandmother. They spent many happy hours
mastering every type of cookie imaginable and later devised new recipes
that were both healthy and delicious. Now at the start of her second
year in college, Natalie is investigating possibilities for starting
her own business as part of the entrepreneurship program in which she
is enrolled. A long-time friend insists that Natalie has to include
cookies in her business plan. After a series of brainstorming sessions,
Natalie settles on the idea of operating a cookie-making school. She
will start on a part-time basis and offer her services in people’s
homes. Now that she has started thinking about it, the possibilities
seem endless. During the fall, she will concentrate on holiday cookies.
She will offer group sessions (which will probably be more entertainment
than education) and individual lessons.
Natalie also decides to include children in her target market. The
first difficult decision is coming up with the perfect name for her
business. She settles on “Cookie Creations,” and then moves on to more
important issues.
Instructions
(a) What form of business organization—proprietorship, partnership, or
corporation— do you recommend that Natalie use for her business? Discuss
the benefits and weaknesses of each form that Natalie might consider.
(b) Will Natalie need accounting information? If yes, what information
will she need and why? How often will she need this information?
(c) Identify specific asset, liability, revenue, and expense accounts
that Cookie Creations will likely use to record its business
transactions.
(d) Should Natalie open a separate bank account for the business? Why or why not?
(e) Natalie expects she will have to use her car to drive to people’s
homes and to pick up supplies, but she also needs to use her car for
personal reasons. She recalls from her first-year accounting course
something about keeping business and personal assets separate. She
wonders what she should do for accounting purposes. What do you
recommend?
Click here for the solution: Continuing Cookie Chronicle (CCC1) Solution
