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.