Using the information from P 2-8, prepare and complete a worksheet similar to Illustration 2A-1. Use the information in the worksheet to prepare an income statement and a statement of shareholders' equity for 2018 and a balance sheet as of December 31, 2018. Cash dividends paid to shareholders during the year amounted to $6,000. Also prepare the necessary closing entries assuming that adjusting entries have been correctly posted to the accounts.

In P 2-8,

Excalibur Corporation sells video games for personal computers. The unadjusted trial balance as of December 31, 2018, appears below. December 31 is the company's fiscal year-end. The company uses the perpetual inventory system.

Information necessary to prepare the year-end adjusting entries appears below.
1. The office equipment was purchased in 2016 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 $4,500.
3. The company borrowed $30,000 on September 1, 2018. 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.

Transcribed Image Text:

Account Title Cash Accounts receivable Supplies Prepaid rent Credits 23,300 32,500 65,000 75,000 0 Office equipment Accumulated depreciation-office equipment Accounts payable Salaries and wages payable Note payable Common stock Retained earnings Sales revenue 10,000 26,100 30,000 80,000 16,050 180,000 Account Title Deblts Credits Cost of goods sold Interest expense Salaries and wages expense Rent expense Supplies expense Utility expense 95,000 32,350 1A10 2,000 6,000 345,150 Totals 345,150