Comprehensive Problem
Whitelands Consulting, Inc. began business on January 1, 2015. It sold $100 of stock to its investors on that day in exchange for cash. 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, 2015, it earned $60 of revenue from its first client. The client paid cash on that date. Whitelands provided consulting services to a second client on January 30, 2015. The firm accepted the second client’s promise to pay $30 in cash during February (creating an account receivable). On January 31, 2015, Whitelands paid $75 in cash to cover its January operating expenses.
Required:
1. Identify Whitelands as a sole proprietorship, partnership, or corporation and explain your rationale.
2. Which accounting body or bodies 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, 2015.
5. Should Whitelands recognize any expenses on January 31, 2015?