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Carl Davis hired your team to keep the business records of Davis Consulting. Davis Consulting performs systems consulting and has begun selling software. The transactions are kept using the accrual method of accounting. The company uses the perpetual inventory system to account for software inventory.

Davis Consulting completed the following transactions during the first $6$ months of $20$X$1$:

Jan. $1$ Owner contributed $$20,000$ cash in exchange for capital.

Jan. $4$ Paid monthly office rent, $$500,$ check #$205.$

Jan. $6$ Purchased office furniture on account, $$3,900.$ The furniture should last for five years; salvage value is $$900.$

Jan. $6$ Purchased office supplies on account, $$400.$

Feb. $1$ Purchased $80$ units software inventory on account, $$1,680,$ plus freight$-$in$,$ $$80.$

Feb. $2$ Paid monthly office rent, $$500,$ check #$206.$

Feb. $2$ Paid cash for a computer, $$2,700.$ This equipment is expected to remain in service for five years; salvage value is $$900,$ check #$207.$

Feb. $13$ Performed consulting service for a client on account, $$1,500.$

Feb. $21$ Hired an administrative assistant to be paid $$2,100$ on the $20$th day of each month. The secretary begins work immediately.

Feb. $28$ Paid utilities expenses, $$200,$ check #$208.$

Feb. $28$ Received $$1,800$ in advance for client service to be performed in the future.

Mar. $1$ Sold $40$ software units on account, $$2,000.$

Mar. $2$ Prepaid five months office rent, $$2,375,$ check #$209.$

Mar. $4$ Performed service for a client and received cash of $$1,000.$

Mar. $5$ Paid $$400$ on account for the office supplies purchased on Jan. $6,$ check #$210.$

Mar. $7$ Collected $$300$ on account for the consulting services performed on Feb. $13.$

Mar. $14$ Davis withdrew cash of $$1,500.$

Mar. $20$ Paid employee salaries, $$2,100,$ check #$211.$

Apr. $2$ Purchased $240$ units software inventory on account, $$6,240.$

Apr. $20$ Paid employee salaries, $$2,100,$ check #$212.$

Apr. $30$ Paid utilities, $$200,$ check #$213.$

May $5$ Sold $120$ units software for cash, $$6,000.$

May $10$ Paid on account, $$1,760,$ for the office furniture purchased on Jan. $4,$ check #$214.$

May $20$ Paid employee salaries, $$2,100,$ check #$215.$

May $30$ Collected $$1,500$ on account for inventory sold on Mar. $1.$

Jun. $4$ Completed a consulting engagement and received cash of $$7,800.$

Jun. $11$ Purchased office supplies on account, $$300.$

Jun. $14$ Consulted with a client for a fee of $$1,000$ on account.

Jun. $20$ Paid utilities, $$200,$ check #$216.$

Jun. $20$ Paid employee salaries, $$2,100,$ check #$217.$

Jun. $29$ Paid $$3,900$ on account, check #$218.$

At June $30,20$X$1,$ the business gathers the following information for the adjusting entries:

a$)$ Four months of prepaid rent expired at the end of June.

b$)$ Accrue salaries payable as of June $30(10$ days accrued, not paid$).$

c$)$ Accrued service revenue, $$600.$

d$)$ Earned $$600$ of the service revenue collected in advance on February $28.$

e$)$ Office supplies on hand totals $$200.$

f$)$ Depreciation is recorded for the computer $(5$ months$)$ and the furniture $(6$ months$).$

g$)$ Physical count of software inventory, $145$ units.

Requirements:

$1.$ Prepare perpetual inventory records for $20$X$1$ for Davis using the LIFO inventory costing method. $($Note: You must calculate the cost of goods sold on March $1$ and May $5$ from the information in the inventory schedule.$)$

$2.$ Journalize the transactions $($explanations are required$)$ but not the adjusting entries yet $($you will prepare adjusting entries in #$4).$

$3.$ Post the journal entries to the ledgers showing dates, account numbers, and account balances.

$4.$ Prepare the year$-$end bank reconciliation using the bank statement below.

$5.$ Journalize AND post any transactions required from the bank reconciliation.

$6.$ Journalize AND post the adjusting entries.

$7.$ Prepare the Adjusted Trial Balance for the $6$ months ended June $30,20$X$1.$

$8.$ Prepare the financial statements for Davis Consulting for the $6$ months ended June $30,20$X$1$ using the Adjusted Trial Balance. Required financial statements include:

a$.$ Multi$-$step Income Statement $($list Service Revenue underneath gross profit and ignore classifying the expenses as selling and administrative$)$

b$.$ Statement of Owner$$s Equity

c$.$ Classified Balance Sheet

$9.$ Journalize AND post the closing entries.

$10.$ Prepare a post$-$closing trial balance. Make sure these figures agree with your balances in your General Ledger.

Bank Statement for June $30,20$X$1$

Beginning Balance, January $1,20$X$120,000$

Deposits and other Credits:

Feb. $29$ EFT customer $1,800$

Mar. $7$ EFT customer $1,000$

Mar. $10$ EFT customer $300$

May $6$ EFT customer $6,000$

Jun. $1$ EFT customer $1,500$

Jun. $22$ EFT customer $500$

Jun. $29$ interest $2211,122$

Checks and other Debits:

Jan. $7$ ck#$205500$

Feb. $5$ ck#$206500$

Feb. $5$ ck#$2072,700$

Mar. $3$ ck#$208200$

Mar. $5$ ck#$2092,375$

Mar. $8$ ck#$210400$

Mar. $14$ withdrawal $1,500$

Mar. $23$ ck#$2112,100$

Apr. $23$ ck#$2122,100$

May $2$ ck#$213200$

May $13$ ck#$2141,760$

May $23$ ck#$2152,100$

Jun. $23$ ck#$216200$

Jun. $24$ EFT payment to Paper Supplies Company $9$

Jun. $25$ Bank service charge $1516,659$

Ending Balanc

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