Concept explainers
The Game Place is a retail store that sells computer games, owned by Matt Huffman. On December 31, 2019, the firm’s general ledger contained the accounts and balances below. All account balances are normal.
INSTRUCTIONS
- 1. Prepare the
Trial Balance section of a 10-column worksheet. The worksheet covers the year ended December 31, 2019. - 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, 2019, was counted and determined to be $21,200.
c. The amount recorded as prepaid advertising represents $480 paid on September 1, 2019, for six months of advertising.
d. The amount of supplies on hand at December 31 was $125.
e. Depreciation on store equipment was $4,500 for 2019.
f. Depreciation on office equipment was $1,500 for 2019.
g. Unearned seminar fees represent $7,500 received on November 1, 2019, 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, 2019, 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. One month’s interest is owed at December 31, 2016.
Analyze: How did the balance of merchandise inventory change during the year ended December 31, 2019?
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