Carl Redmon decided to expand his business and begin selling accounting software, as well as providing consulting services. During January, Carl Redmon Consulting completed these transactions:

Jan 2 Completed a consulting engagement and received cash of $7,200.

2 Prepaid three months office rent, $1,500.

7 Purchased software inventory on account, $3,900, plus freight in, $100.

15 Withdrew $500 for personal use.

18 Sold software on account, $1,100 (cost $700).

19 Consulted with a client for a fee of $900 on account.

20 Paid the secretarys salary for the month.

21 Paid on account, $2,000.

24 Paid utilities, $300.

28 Sold software for cash, $600 (cost $400).

31 Recorded these adjusting entries:

a) Accrued salary expense.

b) Depreciation of computer and furniture.

c) Expiration of prepaid rent.

d) Expiration of prepaid insurance.

e) Physical count of inventory, $2,800.

f) Earned the remaining revenue from December 22.

g) Redmon estimates that 3% of inventory sold will be returned

REQUIRED

1a) Prepare journal entries for the above transactions and post these entries to the ledger.

b) Prepare adjusting entries on January 31 and post to the ledger.

c) Prepare an adjusted trial balance, an income statement, a statement of owners equity, and a balance sheet as of / on January 31, 2018.

d) Prepare closing entries at January 31, 2018 and post to the ledger.

e) Prepare a post-closing trial balance on January 31, 2018.

f) Write a letter to the CEO explaining the financial position of the company.

Carl Redmon Consultin Chart of Accounts Account Title Number Cash Accounts Receivable Supplies Software Invento Estimated Returns Invento Prepaid Rent Prepaid Insurance Equipment Accumulated Depreciation Equipment Furniture Accumulated Depreciation - Furniture Accounts Pavable Salary Pavable Unearned Service Revenue Refunds Pavable Carl Redmon, Capital Carl Redmon, Withdrawals Service Revenue Sales Revenue Cost of Goods Sold Rent Expense Utilities Expense Salary Expense Depreciation Expense Equipment Depreciation Expense Furniture Supplies Expense Insurance Expense Income Summa 101 102 103 104 104.5 105 106 107 107.5 108 108.5 201 202 203 204 301 302 401 402 501 502 503 504 505 506 507 508 601