Excalibur Corporation sells video games for personal computers. The unadjusted trial balance as of December 31, 2021, appears below. December 31 is the companys reporting year-end. The company uses the perpetual inventory system.

Account Title	Debits		Credits
Cash	81,725
Accounts receivable	27,500
Supplies	0
Prepaid rent	0
Inventory	67,500
Office equipment	85,000
Accumulated depreciation			11,050
Accounts payable			36,500
Salaries payable			5,000
Notes payable			31,500
Common stock			125,000
Retained earnings			20,250
Dividends	9,375
Sales revenue			260,000
Cost of goods sold	135,000
Interest expense	0
Salaries expense	56,350
Rent expense	18,200
Supplies expense	2,400
Utility expense	6,250
Totals	489,300		489,300

Information necessary to prepare the year-end adjusting entries appears below.

1. The office equipment was purchased in 2019 and is being depreciated using the straight-line method over an eight-year useful life with no salvage value.
2. Accrued salaries at year-end should be $7,500.
3. The company borrowed $31,500 on September 1, 2021. 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 $600.
5. Prepaid rent at year-end should be $1,350.

1. Complete the worksheet below. 2-a. Use the information in the worksheet to prepare an income statement for 2021. 2-b. Use the information in the worksheet to prepare a statement of shareholders equity for 2021. 2-c. Use the information in the worksheet to prepare a balance sheet as of December 31, 2021. 3. Prepare the necessary closing entries assuming that adjusting entries have been correctly posted to the accounts.