2.99 See Answer

Question: Gamer’s Paradise is a retail store


Gamer’s Paradise is a retail store that sells computer games, owned by Matt Huffman.
On December 31, 20X1, the firm’s general ledger contained the accounts and balances below.
All account balances are normal.



Gamer’s Paradise is a retail store that sells computer games, owned -1




Gamer’s Paradise is a retail store that sells computer games, owned -2




Gamer’s Paradise is a retail store that sells computer games, owned -3

INSTRUCTIONS
1. Prepare the Trial Balance section of a 10-column worksheet. The worksheet covers the year ended December 31, 20X1.
2. Enter the adjustments below in the Adjustments section of the worksheet. Identify each adjustment with the appropriate letter.
3. Complete the worksheet.
ADJUSTMENTS
a.–b. Merchandise inventory at December 31, 20X1, was counted and determined to be $21,200.
c. The amount recorded as prepaid advertising represents $2,880 paid on September 1, 20X1, for six months of advertising.
d. The amount of supplies on hand at December 31 was $105.
e. Depreciation on store equipment was $4,500 for 20X1.
f. Depreciation on office equipment was $1,000 for 20X1.
g. Unearned seminar fees represent $8,500 received on November 1, 20X1, for five seminars. At December 31, three of these seminars had been conducted.
h. Wages owed but not paid at December 31 were $800.
i. On December 31, the firm owed the employer’s social security tax ($49.60) and Medicare tax ($11.60).
j. The note payable bears interest at 8 percent per annum. Two months of interest is owed at
December 31, 20X1.
Analyze: How did the balance of merchandise inventory change during the year ended
December 31, 20X1?

2.99

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