Excalibur Corporation sells video games for personal computers. The unadjusted trial balance as of December 31, 2024, appears below. December 31 is the company’s reporting year-end. The company uses the perpetual inventory system. Account Title Debits Credits Cash $ 68,725 Accounts receivable 27,500 Supplies 3,600 Prepaid rent 30,000 Inventory 67,500 Office equipment 85,000 Accumulated depreciation $ 11,050 Accounts payable 36,500 Salaries payable 5,000 Notes payable (long-term) 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 0 Supplies expense 0 Utility expense 6,250 Totals $ 489,300 $ 489,300 Information necessary to prepare the year-end adjusting entries appears below. The office equipment was purchased in 2022 and is being depreciated using the straight-line method over an eight-year useful life with no residual value. Accrued salaries at year-end should be $7,500. The company borrowed $31,500 on September 1, 2024. 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%. The company debits supplies when supplies are purchased. Supplies on hand at year-end cost $600. Prepaid rent expired during the period is $14,600. Cash dividends paid to shareholders during the year amounted to $9,375. Required: 1. Complete the worksheet below. 2-a. Use the information in the worksheet to prepare an income statement for 2024. 2-b. Use the information in the worksheet to prepare a statement of shareholders’ equity for 2024. 2-c. Use the information in the worksheet to prepare a balance sheet as of December 31, 2024. 3. Prepare the necessary closing entries assuming that adjusting entries have been correctly posted to the accounts.

Financial Accounting

15th Edition

ISBN:9781337272124

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter6: Accounting For Merchandising Businesses

Section: Chapter Questions

Problem 9PA: On December 31, 2019, the balances of the accounts appearing in the ledger of Wyman Company are as...

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Question

Excalibur Corporation sells video games for personal computers. The unadjusted trial balance as of December 31, 2024, appears below. December 31 is the company’s reporting year-end. The company uses the perpetual inventory system.

Account Title	Debits	Credits
Cash	$ 68,725
Accounts receivable	27,500
Supplies	3,600
Prepaid rent	30,000
Inventory	67,500
Office equipment	85,000
Accumulated depreciation		$ 11,050
Accounts payable		36,500
Salaries payable		5,000
Notes payable (long-term)		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	0
Supplies expense	0
Utility expense	6,250
Totals	$ 489,300	$ 489,300

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

The office equipment was purchased in 2022 and is being depreciated using the straight-line method over an eight-year useful life with no residual value.
Accrued salaries at year-end should be $7,500.
The company borrowed $31,500 on September 1, 2024. 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%.
The company debits supplies when supplies are purchased. Supplies on hand at year-end cost $600.
Prepaid rent expired during the period is $14,600.

Cash dividends paid to shareholders during the year amounted to $9,375.

Required:

1. Complete the worksheet below.

2-a. Use the information in the worksheet to prepare an income statement for 2024.

2-b. Use the information in the worksheet to prepare a statement of shareholders’ equity for 2024.

2-c. Use the information in the worksheet to prepare a balance sheet as of December 31, 2024.

3. Prepare the necessary closing entries assuming that adjusting entries have been correctly posted to the accounts.

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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