Cleaning Co. began business on March 1, 2011. The company gives specialized cleaning services to corporate clients. Listed below are the transactions entered in by Cleaning Co. throughout its first month of operations:
1. Borrowed $200,000 and signed a 10-year note at bank.
2. Issued 1,000 shares for $100,000 in the cash.
3. Signed a 1-year lease for space in a strip mall on March 1and paid the first month’s rent of $1,000 in cash.
4. Acquired cleaning equipment at a cost of $100,000. The company paid $25,000 in cash and will pay remainder throughout the next year. The equipment is expected to last ten years.
5. Provided services to 25 clients who were charged fees of $200 each for the month. 20 clients paid the monthly fees. 5 clients were provided services but haven’t paid yet.
6. Paid employees’ wages of $4,000.
7. Purchased a computer for $1,000 on credit.
8. Received a power bill for $200 which has not yet been paid.
9. Received a phone bill for $100 which was paid.
10. Contracted a company to print flyers and distribute them for a fixed fee of $500. The flyers have been printed and distributed however an invoice has not yet been received from company.
11. Paid dividends of $1,000 to shareholders.
Cleaning Co. has a chart of accounts which consists of the following accounts:
Cleaning service fees
a. Make the general journal for the Cleaning Co. for the month of March 2011 and prepare down all journal entries.
b. Post all journal entries to ledger accounts (hint – use T accounts).
c. Make a trial balance as at March 31, 2011.
d. Make a Balance Sheet, Income Statement and Statement of Retained Earnings for the month of March 2011.
e. What does the Income Statement tell you about Cleaning Co’s first month of operations?
a. Elucidate a major factor which led to introduction of International Financial Reporting Standards (IFRS).
b. Elucidate how users of financial information benefit from IFRS.
c. Give one ex of how Canadian generally accepted accounting principles (GAAP) and IFRS sometimes emphasize different qualitative attributes of financial information.
d. In what year were Canadian companies with shares traded on the Toronto Stock Exchange required to begin using IFRS?