Journal Entries and Calculations:

Davis Consulting is both doing consulting service and selling accounting software and uses the perpetual inventory system to account for software inventory. During January, Davis Consulting completed the following transactions:

Jan. 1 Issued 10,000 of shares with the par value of $5, received $100,000.

2 Completed a consulting engagement and received cash of $7,800.

2 Prepaid three months office rent, $1,650.

7 Purchased 80 units software inventory on account, $1,680, plus freight in, $80. (5/15, EOM)

18 Sold 40 software units on account, $3,500 (cost $880). (3/10, n/30)

19 Borrow 5,000 of cash from a bank.

20 Paid employee salaries, $2,055, which includes accrued salaries from December of 1,000.

21 Paid on account, $1,760.

22 Received full payment of the sale on Jan. 18.

24 Paid utilities, $250.

25 Paid for half of the inventory bought in Jan. 7.

28 Bought 1,000 shares of stock back and paid for 7,000. (cost method)

31 Recorded the following adjusting entries:

a. Accrued salaries expense, $686

b. depreciation, $100 (equipment, $30; Furniture, $70)

c. expiration of prepaid rent, $550