Excalibur Corporation sells video games for personal computers.The unadjusted trial balance as of December 31, 2018, appearsbelow. December 31 is the company’s fiscal year-end. The companyuses the perpetual inventory system. Account Title Debits CreditsCash 80,380 Accounts receivable 25,500 Supplies 0 Prepaid rent 0Inventory 61,500 Office equipment 77,000 Accumulateddepreciation—office equipment 10,010 Accounts payable 32,100Salaries and wages payable 4,200 Note payable 30,300 Common stock105,000 Retained earnings 18,050 Sales revenue 240,000 Cost ofgoods sold 125,000 Interest expense 0 Salaries and wage expense46,750 Rent expense 15,800 Supplies expense 2,080 Utility expense5,650 Totals 439,660 439,660 Cash dividends paid to shareholdersduring the year amounted to $7,875. Information necessary toprepare the year-end adjusting entries appears below. The officeequipment was purchased in 2016 and is being depreciated using thestraight-line method over an eight-year useful life with no salvagevalue. Accrued salaries and wages at year-end should be $6,300. Thecompany borrowed $30,300 on September 1, 2018. The principal is dueto be repaid in 10 years. Interest is payable twice a year on eachAugust 31 and February 28 at an annual rate of 10%. The companydebits supplies expense when supplies are purchased. Supplies onhand at year-end cost $520. Prepaid rent at year-end should be$1,150. 1. Complete the worksheet below. 2-a. Use the informationin the worksheet to prepare an income statement for 2018. 2-b. Usethe information in the worksheet to prepare a statement ofshareholders’ equity for 2018. 2-c. Use the information in theworksheet to prepare a balance sheet as of December 31, 2018. 3.Prepare the necessary closing entries assuming that adjustingentries have been correctly posted to the accounts.
