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 [30-40 min]

This problem continues the Draper Consulting, Inc., situation from Problem of 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, Common stock, Retained earnings, Dividends, 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.

Start from the posted T-accounts and the adjusted trial balance that Draper Consulting prepared for the company at December 31:

Requirements

1. Complete the accounting worksheet at December 31.

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2. Journalize and post the closing entries at December 31. Denote each closing amount as Clo and an account balance as Bal.

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3. Prepare a classified balance sheet at December 31.