ACC 307 SPECIAL PROBLEM 1 (CH2)

SPECIAL PROBLEM 1 (CH2)

1.

Renee Cambrice

value:

100.00
points
Excalibur Corporation manufactures and sells video games for personal computers. The unadjusted trial
balance as of December 31, 2013, appears below. December 31 is the companys fiscal year-end. The
company uses the perpetual inventory system.
Account Title
Cash
Accounts receivable
Supplies
Prepaid rent
Inventory
Equipment
Accumulated depreciationequipment
Accounts payable
Wages payable
Note payable
Common stock
Retained earnings
Sales revenue
Cost of goods sold
Interest expense
Wage expense
Rent expense
Supplies expense
Utility expense
Totals

Debits
23,300
32,500
0
0
65,000
75,000

Credits

10,000
26,100
3,000
30,000
80,000
16,050
180,000
95,000
0
32,350
14,000
2,000
6,000
345,150

345,150

Cash dividends paid to shareholders during the year amounted to $6,000.
Information necessary to prepare the year-end adjusting entries appears below.
1. The equipment was purchased in 2011 and is being depreciated using the straight-line method over
an eight-year useful life with no salvage value.
2. Accrued wages at year-end should be $4,500.
3. The company borrowed $30,000 on September 1, 2013. 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 $500.
5. Prepaid rent at year-end should be $1,000.
Complete the worksheet below.


SPECIAL PROBLEM 1 (CH2)

Account Title

Page 2 of 4

Unadjusted Trial
Balance
Dr.

Adjusting Entries

Cr.

Dr.

Cr.

Adjusted Trial
Balance
Dr.

Cr.

Income Statement
Dr.

Cr.

Balance Sheet
Dr.

Cr.

Cash

23,300

23,300

23,300

Accounts receivable

32,500

32,500

32,500

500

500

65,000

65,000

Supplies
Prepaid rent

500

Inventory

65,000

Equipment

75,000

500

75,000

Accumulated depreciationequipment

10,000

Accounts payable

26,100

Wages payable

9,200

26,100

4,500

4,500

4,500

30,000

30,000

Interest payable

9,200

26,100

3,000

Note payable

75,000

9,200

30,000

0

Common stock

80,000

Retained earnings

16,050

Sales revenue

80,000

180,000

Cost of goods sold

80,000

16,050

16,050
180,000

95,000

95,000

180,000
95,000

Interest expense
Wage expense

32,350

32,350

Rent expense

14,000

500

Supplies expense

2,000

500

Utility expense

6,000

6,000

Depreciation expense

27,850

4,500
500

250

250

1,000

1,000

6,000

1,000

107,250

180,000

212,350

150,300

107,250

180,000

212,350

150,300

Net income

345,150

Totals

345,150

40,350

14,200

308,600

357,650

Use the information in the worksheet to prepare an income statement for 2013.
EXCALIBUR CORPORATION
Income Statement
For the Year Ended December 31,2013
Sales revenue

$

180,000

Cost of goods sold

95,000

Gross profit (loss)

85,000

Operating expenses:
Wages expense

4,500

Rent expense

1,000

Depreciation expense

1,000

Utility expense

6,000

Supplies expense

Total operating expenses

500

13,000

Operating income (loss)
Other expense:
Interest expense

1,000

Net income (loss)

Use the information in the worksheet to prepare a statement of shareholders equity for 2013. (Negative
amounts should be indicated by a minus sign.)


SPECIAL PROBLEM 1 (CH2)

Page 3 of 4

EXCALIBUR CORPORATION
Statement of Shareholders' Equity
For the Year Ended December 31, 2013
Common
stock

Retained
Earnings

Total
Shareholders'
Equity

Balance at January 1, 2013
Issue common stock
Add: Net income
Less: Dividends
Balance at December 31, 2013

Use the information in the worksheet to prepare a balance sheet as of December 31, 2013.
EXCALIBUR CORPORATION
Balance Sheet
At December 31, 2011
Assets
Current assets:
Cash

$

23,300

Accounts receivable

32,500

Supplies

500

Inventory

65,000

Prepaid rent

1,000

Total current assets

122,300

Equipment

75,000

Less: Accumulated depreciation

10,000
122,300

Total assets
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable

26,100

Wages payable

4,500

Interest payable

1,000

Note payable

30,000

Total current liabilities

61,600

Shareholders equity:
Common stock

80,000

Retained earnings

10,050

Total shareholders equity
Total liabilities and shareholders equity

90,050
$

151,650

Prepare the necessary closing entries assuming that adjusting entries have been correctly posted to the
accounts. (If no entry is required for a particular transaction, select "No journal entry required" in
the first account field.)


SPECIAL PROBLEM 1 (CH2)

view transaction list

Page 4 of 4

view general journal

Journal Entry Worksheet
1 2 3

Close the revenue accounts as necessary

Date

General Journal

Debit

Credit

December 31, 2013

*Enter debits before credits

done

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record entry