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QUESTION 1 (60 points) Sana Consulting Inc. began business on February 1, 2018. The company provides environmental engineering consulting services to...
QUESTION 1 (60 points) Sana Consulting Inc. began business on February 1, 2018. The company provides environmental engineering consulting services to corporate clients. Listed below are the transactions entered into by Sana Consulting during February, its first month of operations: 1. Borrowed $100,000 by signing a 10-year note at the bank, on February 1. 2. On February 1, signed a 12-month rental lease for office space, and paid $42,000 in advance for the full year of rent. 3. Issued 2,000 shares for $125,000 cash, on February 2. 4. On February 5, purchased equipment at a cost of $250,000, by paying $150,000 cash, with the balance on account, to be paid over the next six months. 5. Purchased a computer for $1,500 on credit, on February 12. 6. On February 22, environmental consulting services were completed for a client who was charged a fee of $10,000. The client paid half of the fee in cash, and the balance will be paid in March. 7. Paid employees' wages of $3,000 on February 27. 8. Received a $200 power bill on February 27, which has not yet been paid. 9. Received a $100 phone bill on February 28, which was paid. 10. On February 28, paid $500 towards the outstanding amount owing for the computer purchase. 11. Paid dividends of $400 to shareholders on February 28. 12. On February 28, recorded use of office space rent, for the month of February. Sana Consulting has a chart of accounts which includes the following accounts: Accounts Payable Notes Payable Accounts Receivable Phone Expense Cash Prepaid Rent Common Shares Rent Expense Computer Retained Earnings Equipment Utilities Expense Consulting Service Revenue Wages Expense Dividends Required: a. Prepare the general journal for Sana Consulting for the month of February 2018 and record all journal entries. (24 points) b. Post all journal entries to ledger accounts (hint - use T accounts). (5 points) c. trial balance as at February 28, 2018. (5 points) d. Income Statement, Statement of Retained Earnings and Balance Sheet (Statement of Financial Position) for the month of February 2018. (23 points) e. What does the Income Statement tell you about Sana Consulting's first month of operations? (3 points)
