Question: Excalibur Corporation sells video games for personal computers. The unadjusted trial balance as of December 31, 2016, appears below. December 31 is the company's fiscal year-end. The company uses the perpetual inventory system.
| Account Title |
Debits |
Credits |
| Cash |
|
24,000 |
|
|
|
| Accounts receivable |
|
33,200 |
|
|
|
| Supplies |
|
0 |
|
|
|
| Prepaid rent |
|
0 |
|
|
|
| Inventory |
|
72,000 |
|
|
|
| Office equipment |
|
85,950 |
|
|
|
| Accumulated depreciation-office equipment |
|
|
|
|
10,700 |
| Accounts payable |
|
|
|
|
26,800 |
| Salaries and wages payable |
|
|
|
|
3,700 |
| Note payable |
|
|
|
|
37,000 |
| Common stock |
|
|
|
|
87,000 |
| Retained earnings |
|
|
|
|
22,100 |
| Sales revenue |
|
|
|
|
187,000 |
| Cost of goods sold |
|
102,000 |
|
|
|
| Interest expense |
|
0 |
|
|
|
| Salaries and wages expense |
|
33,050 |
|
|
|
| Rent expense |
|
14,700 |
|
|
|
| Supplies expense |
|
2,700 |
|
|
|
| Utility expense |
|
6,700 |
|
|
|
| Totals |
|
374,300 |
|
|
374,300 |
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 nine-year useful life with no salvage value.
2. Accrued salaries and wages at year-end should be $5,550.
3. The company borrowed $37,000 on September 1, 2016. The principal is due to be repaid in 12 years. Interest is payable twice a year on each August 31 and February 28 at an annual rate of 12%.
4. The company debits supplies expense when supplies are purchased. Supplies on hand at year-end cost $570.
5. Prepaid rent at year-end should be $1,700.
Required: Prepare the necessary December 31, 2016, adjusting entries. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations.)
Journal Entry Worksheet: The office equipment was purchased in 2014 and is being depreciated using the straight-line method over an nine-year useful life with no salvage value.
Accrued salaries and wages at year-end should be $5,550.
The company borrowed $37,000 on September 1, 2016. The principal is due to be repaid in 12 years. Interest is payable twice a year on each August 31 and February 28 at an annual rate of 12%.
The company debits supplies expense when supplies are purchased. Supplies on hand at year-end cost $570.
Prepaid rent at year-end should be $1,700.