Prepare the year-end adjusting entries appears

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Reference no: EM131765032

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   24,200        
  Accounts receivable   33,400        
  Supplies   0        
  Prepaid rent   0        
  Inventory   74,000        
  Office equipment   76,800        
  Accumulated depreciation-office 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.

Reference no: EM131765032

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