You and your friend (BFF) had founded a consulting company a few months ago. After very successful six months of operations you and your friends have now decided to expand your consulting services business. The different business transactions that took place are detailed below. Oct 1 On October 1st, an investor (VC) decides to invest in your new venture. VC contributes $35,000 in cash and a car to your company. The car was originally bought for $30,000 3 years ago but it is now worth $14,000. The car is supposed to last for five additional years with 2,000 salvage value. In return VC was issued stock in the company. Oct 1 The Company signs a one-year lease for a bigger office space near USC. The rent is $2,500 per month. Because your company is an old customer therefore it is not required to pay rent upfront. The rent will be paid in cash 5 days after each month- end. In addition, a security deposit of $1,000 is required to be paid at the time the lease is signed. If there are no damages to the space during the lease period, the security deposit will be returned at the end of the lease period (e.g., when the business moves out). The company moves into the new office space the same day. Oct 1 The Company provides $1,200 worth of consulting services to Harold Crick, a tax accountant. In return Harold Crick promises to provide tax services to the company in the month of December. Oct 2 The Company hires an intern at a monthly salary of $2,000. The intern is paid 1,500 cash advance towards October's salary. Oct 3 The Company paid $1,000 for advertising in a local newspaper for a series of five ads. The first ad is going to run on November 15th. Oct 15 The Company borrows $10,000 from a bank with interest rate of 12% per year in order to meet the cash flow needs. The note and the interest are due in six months. Oct 17 The Company signs a contract and receives $4,000 cash advance to provide consulting services to Marshall Company (a new customer). The total contract is for $8,500. Oct 28 The Company provides $6,000 in consulting services to ABC Company and receives cash from them. Oct 31 It is the end of the month and the company records the monthly adjusting entries for depreciation of the car, rent on the office space, intern's salary (assume next payday is November 1st) and the interest on the loan from the bank. Additionally, the company determines that it has provided $5,500 worth of services to Marshall Company. Instructions 1. Prepare the journal entries (including adjusting entries) for the month of October. 2. Prepare the income statement for the month of October based on the above information
