Kerr Consulting performs systems consulting. Kerr Consulting has also begun selling accounting software and uses the perpetual inventory system. During January 2014, the business completed these transactions:
Jan. 2 Completed a consulting engagement and received cash of $7,200.
2 Prepaid three months' office rent $9,000.
7 Purchased 100 units of software inventory on account, $1,900, plus freight in, $100.
16 Paid employee salary, $2,000. (Note previous year-end accrual of $500.)
18 Sold 70 software units on account, $3,100 (cost $1,400).
19 Consulted with a client for a fee of $900 on account.
21 Paid on account, $2,000.
22 Purchased 200 units of software inventory on account, $4,600.
24 Paid utilities, $300.
28 Sold 100 units of software for cash, $4,000 (cost $2,210).
31 Recorded the following adjusting entries:
Accrued salary expense, $1,000.
Prepaid rent used, $3,000.
Amortization of office furniture, $100, and of equipment, $33.
Physical count of inventory, 120 units, $2,760.
Required
1. Open the following selected T-accounts in the ledger with their normal opening balances as shown: Cash, $27,850; Accounts Receivable, $900; Supplies, $100, Software Inventory; Prepaid Rent; Equipment, $2,000; Accumulated Amortization-Equipment, $33; Furniture, $6,000; Accumulated Amortization-Furniture, $100; Accounts Payable, $6,100; Unearned Revenue, $1,333, Salaries Payable, $500; Alex Kerr, Capital, $28,784; Income Summary; Service Revenue; Sales Revenue; Cost of Goods Sold; Salaries Expense; Rent Expense; Utilities Expense; Amortization Expense-Equipment; and Amortization Expense-Office Furniture.
2. Journalize and post to the T-accounts 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.
4. Prepare the January 2014 income statement of Kerr Consulting. Use the single-step format.