(Adjusting Entries and Financial Statements) Mason Advertising Agency was founded in January 2008. Presented below are adjusted and unadjusted trial balances as of December 31, 2012.
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MASON ADVERTISING AGENCY
TRIAL BALANCE
DECEMBER 31, 2012
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Unadjusted
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Adjusted
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Dr.
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Cr.
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Dr.
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Cr.
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Cash
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$11,000
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$11,000
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Accounts Receivable
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20,000
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23,500
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Supplies
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8,400
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3,000
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Prepaid Insurance
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3,350
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2,500
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Equipment
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60,000
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60,000
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Accumulated Depreciation-Equipment
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$28,000
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$33,000
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Accounts Payable
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5,000
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5,000
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Interest Payable
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-0-
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150
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Notes Payable
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5,000
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5,000
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Unearned Service Revenue
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7,000
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5,600
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Salaries and Wages Payable
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-0-
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1,300
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Common Stock
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10,000
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10,000
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Retained Earnings
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3,500
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3,500
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Service Revenue
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58,600
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63,500
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Salaries and Wages Expense
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10,000
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11,300
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Insurance Expense
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850
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Interest Expense
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350
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500
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Depreciation Expense
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5,000
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Supplies Expense
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5,400
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Rent Expense
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4,000
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4,000
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$117,100
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$117,100
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$127,050
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$127,050
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Instructions
(a) Journalize the annual adjusting entries that were made. (Omit explanations.)
(b) Prepare an income statement and a statement of retained earnings for the year ending December 31, 2012, and an unclassified balance sheet at December 31.
(c) Answer the following questions.
(1) If the note has been outstanding 3 months, what is the annual interest rate on that note?
(2) If the company paid $12,500 in salaries and wages in 2012, what was the balance in Salaries and Wages Payable on December 31, 2011?