Whitelands Consulting, Inc. began business on January 1, 2020. 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. Immediately after selling the stock on January 1, 2020, Whitelands secured a $100, one-year loan from Redlands Bank. The loan carried a 12% annual interest rate. Whitelands will repay the $100 principal plus one years interest to the bank on January 1, 2021. During its first month of operations, Whitelands provided consulting services to two clients. On January 15, 2020, 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, 2020. The firm accepted the second clients promise to pay $30 in cash during February (creating an account receivable as of January 31, 2020). On January 31, 2019, Whitelands acknowledged that it incurred $75 in January operating expenses and planned to pay them in early February (creating an account payable as of January 31, 2020). Whitelands also acknowledged it incurred one months interest on the bank loan and stated the need to report interest payable as a liability on its balance sheet.

1. Identify Whitelands as a sole proprietorship, partnership, or corporation. Explain your rationale.

2. Explain which accounting 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, 2020.

5. Should Whitelands recognize any operating expenses on January 31, 2020?

6. Should Whitelands recognize any interest expense for January 2020?

7. Report Whitelands January 2020 income statement and balance sheet on December 31, 2020 by creating and completing tables as outlined in the textbook.