Reference no: EM131772041

Comprehensive Case Question -

True North Consultants Ltd. commenced operations on January 1, 2009. In order to keep on top of its accounting, True North plans to record and adjust its accounts monthly. It conducted the following transactions during January:

Jan. 2 Issued $30,000 of common shares for cash.

Jan. 2 Signed a five-year lease for office space.

Jan. 5 Prepaid six months of liability insurance, $900.

Jan. 5 Paid the first (January 2009) and last (December 2009) month's rent, $3,000 per month, for a total payment of $6,000.

Jan. 6 Purchased office equipment on account, $12,000.

Jan. 7 Purchased $2,000 of office supplies for cash.

Jan. 8 Visited client offices and agreed on the terms of a consulting project. True North will invoice the client, Anjou Productions, on the 15th of each month for work performed.

Jan. 9 Leased a vehicle for a four-year term. Paid the first month's lease payment of $450 and a security deposit of $3,000. Use the accounts Vehicle Lease Expense and Prepaid Vehicle Lease (long-term), respectively, to record these amounts.

Jan. 12 Negotiated a $25,000 line of credit at the bank to be used as needed to cover temporary cash overdrafts.

Jan. 13 Met with a new client, Babson Technologies. Received $5,000 cash as a retainer for future work to be performed.

Jan. 15 Invoiced Anjou Productions for $4,000 of consulting services provided on account.

Jan. 16 Paid a telecommunications bill of $475.

Jan. 19 Received an invoice for routine legal advice, $1,200. The amount is not due until February 15.

Jan. 21 Completed the first phase of the project for Babson Technologies. Recognized $3,000 of revenue from the cash retainer previously received. Issued the client an invoice marked "Paid."

Jan. 22 Received $4,000 cash from Anjou Productions in payment of the invoice issued on the 15th.

Jan. 26 Received and deposited a $500 fee for speaking at an industry conference.

Jan. 30 Prepared an adjusting entry to record $250 of office supplies used (see January 7 transaction).

Jan. 30 Prepared an adjusting entry to record the expiry of one month's liability insurance (see January 5 transaction).

Jan. 31 Reviewed the accounts for any further adjustments. Office equipment will not be depreciated until the year end. The monthly adjustment is immaterial to the financial statements.

Instructions - In Excel worksheet.

(a) Record the above transactions.

(b) Prepare T accounts and post the general and adjusting journal entries.

(c) Prepare a trial balance as at January 31.

(d) Prepare the (1) statement of earnings, (2) statement of retained earnings, and (3) balance sheet for the month.