prepare the january income statement of draper consulting use the single step format 559697

Journalizing purchase and sale transactions—perpetual inventory; making closing entries, and preparing financial statements

Draper has also begun selling accounting software. During January, Draper Consulting completed the following transactions:

Jan 2

Completed a consulting engagement and received cash of $7,800.


Prepaid three months office rent, $1,650.


Purchased 80 units software inventory on account, $1,680, plus freight in, $80.


Sold 40 software units on account, $3,500 (Cost $880).


Consulted with a client for a fee of $1,000 on account.


Paid employee salary, $2,055.


Paid on account, $1,760.


Purchased 240 units software inventory on account, $6,240.


Paid utilities, $250.


Sold 120 units software for cash, $4,680 (cost $2,960).


Recorded the following adjusting entries: Accrued salary expense, $685 Depreciation, $100 Equipment, $30; Furniture, $70) Expiration of prepaid rent, $550 Physical count of inventory, 145 units, $3,770


1. Open the following selected T accounts in the ledger: Cash; Accounts receivable; Software inventory; Prepaid rent; Accumulated depreciation; Accounts payable; Salary payable; Draper, capital; Draper, drawing; Income summary, Service revenue; Sales revenue; Cost of goods sold; Salary expense; Rent expense; Utilities expense; and Depreciation expense.

2. Journalize and post the January transactions. Key all items by date. Compute each account balance, and denote the balance as Bal.

3. Journalize and post the closing entries. Denote each closing amount as Clo. After posting all closing entries, prove the equality of debits and credits in the ledger.

4. Prepare the January income statement of Draper Consulting. Use the single step format.

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