Daniels Consulting performs system consulting. The company has also begun selling accounting software and uses the perpetual inventory system to account for software inventory. During January, Daniels Consulting completed the following transactions:

Jan 2: Completed a consulting engagement and received cash of $5,700

Jan 2: Prepaid 3 months office rent; $2,400

Jan 7: Purchased 50 units software inventory on account, $1,050, plus freight in, $50

Jan 18: Sold 40 software units on account, $2,625 (cost $880)

Jan 19: Consulted with client for a fee of $2,500 on account

Jan 20: Paid employee salaries, $1,885, which includes accrued salaries from December

Jan 21: Paid on account, $1,100

Jan 22: Purchased 185 units software inventory on account, $4,810

Jan 24: Paid utilities, $375

Jan 28: Sold 135 units of software for cash, $5,265 (cost $3,470)

Jan 31: Recorded the following adjusting entries:

a. Accrued Salaries Expense, $775

b. Depreciation on equipment, $60; Depreciation on furniture, $50

c. Expiration of prepaid rent, $800

d. Physical count of software inventory, 50 units, $1,300

1. Open the following T-accounts in the ledger: Cash, $17,950; Accounts Receivable, $3,600; Software Inventory, $0; Office Supplies, $300; Prepaid Rent, $0; Equipment, $3,600; Accumulated depreciation---Equipment, $60; Furniture, $3,000; Accumulated depreciation---Furniture, $50; Accounts Payable, $3,600; Unearned Revenue, $1,800; Salaries Payable, $685; Daniels Capital, $22,255; Daniels Withdrawals, $0; Income Summary, $0; Service Revenue, $0; Sales Revenue, $0; Cost of Goods Sold, $0; Salaries Expense, $0; Rent Expense, $0; Utilities Expense, $0; Depreciation Expense---Equipment, $0; and Depreciation Expense---Furniture, $0.

2. Prepare the month ended January 31, 2017, income statement of Daniels Consulting. Use the multi-step format. List Service Revenue under gross profit and ignore classifying the expenses as selling and administrative.

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

4. Compute the gross profit percentage of Daniels Consulting.