Journalizing purchase and sale transactions—perpetual inventory; making closing entries, a...

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

This problem continues the Draper Consulting situation from Problem Chapter 4. Draper performs systems consulting. Draper has also begun selling accounting software. During January, Draper Consulting completed the following transactions:

Requirements

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.

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

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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.

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