Question
Excalibur Corporation sells video games for personal computers. The unadjusted trial balance as of December 31, 2016, appears below. December 31 is the companys fiscal
Excalibur Corporation sells video games for personal computers. The unadjusted trial balance as of December 31, 2016, appears below. December 31 is the companys fiscal year-end. The company uses the perpetual inventory system. |
Account Title | Debits | Credits | ||||
Cash | 24,200 | |||||
Accounts receivable | 33,400 | |||||
Supplies | 0 | |||||
Prepaid rent | 0 | |||||
Inventory | 74,000 | |||||
Office equipment | 76,800 | |||||
Accumulated depreciationoffice equipment | 10,900 | |||||
Accounts payable | 27,000 | |||||
Salaries and wages payable | 3,900 | |||||
Note payable | 39,000 | |||||
Common stock | 89,000 | |||||
Retained earnings | 11,550 | |||||
Sales revenue | 189,000 | |||||
Cost of goods sold | 104,000 | |||||
Interest expense | 0 | |||||
Salaries and wages expense | 33,250 | |||||
Rent expense | 14,900 | |||||
Supplies expense | 2,900 | |||||
Utility expense | 6,900 | |||||
Totals | 370,350 | 370,350 | ||||
Information necessary to prepare the year-end adjusting entries appears below. |
1. | The office equipment was purchased in 2014 and is being depreciated using the straight-line method over an eight-year useful life with no salvage value. |
2. | Accrued salaries and wages at year-end should be $5,850. |
3. | The company borrowed $39,000 on September 1, 2016. The principal is due to be repaid in 10 years. Interest is payable twice a year on each August 31 and February 28 at an annual rate of 10%. |
4. | The company debits supplies expense when supplies are purchased. Supplies on hand at year-end cost $590. |
5. | Prepaid rent at year-end should be $1,900. |
Required: |
Prepare the necessary December 31, 2016, adjusting entries. |
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