Question

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

Credits Debits 74,810 26,000 63,000 79,000 Account Title Cash Accounts receivable Supplies Prepaid rent Inventory Office equipment Accumulated depreciation Accounts payable Salaries payable Notes payable Common stock Retained earnings Dividends Sales revenue Cost of goods sold Interest expense Salaries expense Rent expense Supplies expense Utility expense Totals 10,270 33,200 4,400 30, 600 110,000 18,600 8,250 245,000 127,500 49, 150 16,400 2,160 5,800 452,070 452,070 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 us with no salvage value. 2. Accrued salaries at year-end should be $6,600. 3. The company borrowed $30,600 on September 1, 2021. The principal is due to be repaid in 10 years. Interest is payable tw 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 $540. 5. Prepaid rent at year-end should be $1,200. 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.

Answer 1

	Unadjusted Trial Balance		Adjustments		Adjusted Trial Balance		Income Statement		Balance Sheet
Account Titles	Debit	Credit	Debit	Credit	Debit	Credit	Debit	Credit	Debit	Credit
Cash	$      74,810				$    74,810				$    74,810
Accounts Receivable	$      26,000				$    26,000				$    26,000
Supplies	$               -		$              540		$         540				$         540
Prepaid Rent	$               -		$           1,200		$      1,200				$      1,200
Inventory	$      63,000				$    63,000				$    63,000
Office Equipment	$      79,000				$    79,000				$    79,000
Accumulated Depreciation		$      10,270		$   9,875		$    20,145				$    20,145
Accounts Payable		$      33,200				$    33,200				$    33,200
Salaries Payable		$         4,400		$   6,600		$    11,000				$    11,000
Notes Payable		$      30,600				$    30,600				$    30,600
Interest Payable				$   1,020		$      1,020				$      1,020
Common Stock		$   1,10,000				$ 1,10,000				$ 1,10,000
Retained Earnings		$      18,600				$    18,600				$    10,350
Dividends	$         8,250				$      8,250
Sales Revenue		$   2,45,000				$ 2,45,000		$ 2,45,000
Cost of Goods Sold	$   1,27,500				$ 1,27,500		$ 1,27,500
Interest Expense	$               -		$           1,020		$      1,020		$      1,020
Salaries Expense	$      49,150		$           6,600		$    55,750		$    55,750
Rent Expense	$      16,400			$   1,200	$    15,200		$    15,200
Supplies expense	$         2,160			$      540	$      1,620		$      1,620
Utilities Expense	$         5,800				$      5,800		$      5,800
Depreciation Expense			$           9,875		$      9,875		$      9,875
Total	$   4,52,070	$   4,52,070	$        19,235	$ 19,235	$ 4,69,565	$ 4,69,565	$ 2,16,765	$ 2,45,000	$ 2,44,550	$ 2,16,315
Net Income							$    28,235			$    28,235
Totals							$ 2,45,000	$ 2,45,000	$ 2,44,550	$ 2,44,550

Income Statement
Revenues
Sales Revenue		$ 2,45,000.00
Cost of Goods sold		$ 1,27,500.00
Gross Profit		$ 1,17,500.00
Operating Expenses
Interest Expense	$      1,020.00
Salaries Expense	$    55,750.00
Rent Expense	$    15,200.00
Supplies expense	$      1,620.00
Utilities Expense	$      5,800.00
Depreciation Expense	$      9,875.00
Total Operating Expenses		$    89,265.00
Net Income		$    28,235.00

Statement of Shareholder's Equity
	Common Stock	Retained Earnings	Total Shareholder's Equity
Beginning Balance,	$      1,10,000	$          18,600	$          1,28,600
Add: Net Income		$          28,235	$             28,235
	$      1,10,000	$          46,835	$          1,56,835
Less : Drawings		$            8,250	$                8,250
Ending Balance,	$      1,10,000	$          38,585	$          1,48,585

Balance Sheet
Assets
Current Assets
Cash	$          74,810
Accounts Receivable	$          26,000
Supplies	$               540
Prepaid Rent	$            1,200
Inventory	$          63,000
Total Current Assets		$      1,65,550
Office Equipment	$          79,000
Less : Accumulated Depreciation	$        -20,145
Total Land, Buildings and Equipment		$         58,855
Total Assets		$      2,24,405
Liabilities & Stockholder's Equity
Current Liabilities
Accounts Payable	$          33,200
Salaries Payable	$          11,000
Notes Payable	$          30,600
Interest Payable	$            1,020
Total Current Liabilities		$         75,820
Long term Debt		$                  -
Shareholder's Equity
Common Stock	$      1,10,000
Retained Earnings	$          38,585
Total Shareholder's Equity		$      1,48,585
Total Liabilities & Shareholder's Equity		$      2,24,405

Account Titles	Debit	Credit
Sales Revenue	$      2,45,000
Retained Earnings		$      2,45,000
(To close revenue account)
Retained Earnings	$      2,16,765
Depreciation Expense - Building		$      1,27,500
Interest Expense		$      1,020.00
Salaries Expense		$    55,750.00
Rent Expense		$    15,200.00
Supplies expense		$      1,620.00
Utilities Expense		$      5,800.00
Depreciation Expense		$      9,875.00
(To close expense accounts)
Retained Earnings	$            8,250
Dividends		$            8,250
(To close dividend account)
Stacy Tanner, Capital	$          11,900
Stacy Tanner, Drawings		$          11,900
(Drawings transferred to capital