Obtain all data necessary from the worksheet prepared for Gamer’s Paradise in Problem 12.6B at the end of Chapter 12. Then follow the instructions to complete this problem.

Data from in problem12.6B

Gamer’s Paradise is a retail store that sells computer games, owned by Matt Huffman. On December 31, 20X1, the firm’s general ledger contained the accounts and balances below. All account balances are normal.

INSTRUCTIONS
1. Prepare the Trial Balance section of a 10-column worksheet. The worksheet covers the year ended December 31, 20X1.
2. Enter the adjustments below in the Adjustments section of the worksheet. Identify each adjustment with the appropriate letter.
3. Complete the worksheet.

ADJUSTMENTS
a.–b. Merchandise inventory at December 31, 20X1, was counted and determined to be $21,200.
c. The amount recorded as prepaid advertising represents $2,880 paid on September 1, 20X1, for six months of advertising.
d. The amount of supplies on hand at December 31 was $105.
e. Depreciation on store equipment was $4,500 for 20X1.
f. Depreciation on office equipment was $1,000 for 20X1.
g. Unearned seminar fees represent $8,500 received on November 1, 20X1, for five seminars. At December 31, three of these seminars had been conducted.
h. Wages owed but not paid at December 31 were $800.
i. On December 31, the firm owed the employer’s social security tax ($49.60) and Medicare tax ($11.60).
j. The note payable bears interest at 8 percent per annum. Two months of interest is owed at December 31, 20X1.

INSTRUCTIONS
1. Prepare a classified income statement for the year ended December 31, 20X1. The company does not classify its operating expenses as selling expenses and general and administrative expenses.
2. Prepare a statement of owner’s equity for the year ended December 31, 20X1. No additional investments were made during the year.
3. Prepare a classified balance sheet as of December 31, 20X1.

Analyze: 

What is the amount of working capital for Gamer’s Paradise?

Transcribed Image Text:

Cash Accounts Receivable Prepaid Advertising Supplies Merchandise Inventory Store Equipment Accumulated Depreciation-Store Equipment Office Equipment Accumulated Depreciation-Office Equipment Notes Payable, due 20X2 $36,465 2,669 2,880 425 18,500 30,000 3,000 6,000 1,500 22,500