Question

Julianna Lilian is a realtor. She buys and sells properties on her own and also earns a commission as an agent for buyers and sellers. She organized a business in early 2020 where she contributed $60,000 in cash in return for common shares. Consider the following facts as of March 31, 2020:

• Office supplies of $500 were purchased and used during in the period.
• Julianna spent $20,000 for the right to use the Royal Lepage franchise, which allows her to represent herself as an agent. The franchise right is considered an asset.
• The business owes $150,000 as a loan payable for a plot of land that is currently undeveloped. The land cost Julianna $170,000 and she paid the remaining amount using cash. The loan has an interest rate of 8% / year.
• Julianna sold 5 houses and earned a commission of $42,000. As of March 31, all commission has been collected in cash and deposited into Julianna’s business bank account.
• Julianna owes $300,000 on a personal mortgage for her private residence. She acquired the home in 2018 for $450,000. The mortgage has an interest rate of 3% / year.
• In January 2020, Julianna acquired furniture for her office totalling $18,000. The furniture has a useful life of 9 years.
• Julianna paid $22,000 in upfront expenses (insurance and rent). Both expenses will cover the 2020 calendar year (January – December)
• Julianna paid $5,000 is other expenses relating to the business during the period.
• Julianna has $4,000 in her personal bank account and $19,500 in a business bank account.

Questions

1. Identify and explain why some of the data included above are not relevant to preparing the Company’s financial statements

2. Explain 2 relevant users for the financial statements. Explain the decisions that each user may make using the financial statements information

3. Prepare the journal entries and period end adjusting entries for the above transactions

Use the following format:

Dr. Account Name (Asset) $ XXX

Cr. Account Name (Liability) $ XXX

4. List the company’s total assets, total liabilities and total shareholders, as they would appear on the balance sheet as of March 31, 2020

Use the following format:

Cash $X,XXX

Asset 2 $X,XXX

Asset 3 $X,XXX

Asset 4 $X,XXX

Etc.

Total Assets: $X,XXX

Liability 1 $X,XXX

Liability 2 $ X,XXX

Total Liabilities: $X,XXX

Shareholders Equity: $X,XXX

that is all the information

what information do you prime think is missing? that is all that is given

Answer 1

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