Question

Whitelands Consulting, Inc. began business on January 1, 2013. It sold $100 of stock to its investors on that day. This American company lists and trades its stock on the New York Stock Exchange. During its first month of operations, Whitelands provided consulting services to two clients. On January 15, 2013, it earned $60 from its first client. The client paid cash on that date. Whitelands provided consulting services to a second client on January 30, 2013. The firm accepted the second client’s promise to pay $30 in cash during February. Whitelands paid $75 in cash to cover its January operating expenses on January 31, 2013. Required:

1. Identify Whitelands as a sole proprietorship, partnership, or corporation and explain your rationale.

2. Which accounting body would set generally accepted accounting principles for Whitelands?

3. Which agency would Whitelands have to file its financial statements with periodically?

4. Explain if Whitelands should recognize any revenue on January 30, 2013.

5. Record the general journal entries for Whitelands during January 2013.

6. Post the journal entries to Whitelands’ ledger (or T-accounts).

7. Construct Whitelands’ trial balance.

8. Present the January 2013 income statement.

9. Present the January 2013 statement of shareholders’ equity.

10. Present the January 31, 2013 balance sheet.

11. Present the January 2013 statement of cash flows.

Answer 1