Question

Taylor Advisors Limited was organized on Jan 1, 2018. The company plans to use the following accounts:

Cash                                                    Dividends      

Accounts receivable                           Service revenue         

Supplies                                              Advertising expense

Prepaid Insurance                               Salaries Expense

Equipment                                          Interest Expense

Accounts payable                               Office Expense

Bank Loan Payable (non-current)      Rent Expense

Common shares                                  Income Tax Expense

Retained Earnings

The company had the following transactions in the month of January:

Jan. 2   Issued 1,000 common shares for $65 each.

       4   Finalized a lease for office space and paid the first month’s rent of $3,000

       5   Purchased $40,000 of equipment for $10,000 cash and financed the remainder with a long-term bank loan

      8    Paid for an advertisement in a local paper, $500

      10 Purchased supplies on account, $1,000

      11 Paid for several advertising spots on the local radio station, $3,000.

      12 Paid employees $7,500 for the first two weeks of work

      15 Summarized and recorded the billings to clients for the first two weeks of January. Billings totalled $15,000. These amounts are due by the 12^th of the next month.

      17 Paid $1,000 for office expenses.

      19 Paid annual insurance policy with coverage up to December 31, 2018, for $6,000

      24 Received $10,000 from clients in partial settlement of accounts billed on the 15^th.

      25 Declared and paid $500 of dividends to shareholders.

      26 Paid employees $7,500 for the previous two weeks of work

      29 Summarized and recorded the billings to clients for the prior two weeks. Billings totalled $18,000. These amounts are due by the 26^th of the next month.

      30 Made a payment to the bank of $2,000 for interest on the bank loan and $700 to pay on the amount owing for the bank loan.

      31 Paid Canada Revenue Agency $1,500 for an income tax instalment.

Required:

(a) Journalize the transactions

(b) Post the journal entries prepared in part (a) [Please do it on your own, no need to hand in this part. If you choose to include it in the assignment, this part will NOT be marked.]

(c) Prepare a trial balance.

(d) Prepare an income statement, statement of changes in equity, and statement of   financial position for January

Answer 1