Question: Ana Alicia Advertising Corporation was founded in January 2003. Presented on the next page are the adjusted & unadjusted trial balances as of December 31, 2007
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Ana Alicia Advertising
Trial Balance
December 31,2007
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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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$7,000
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$7,000
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Accounts Receivable
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19,000
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22,000
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Art Supplies
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8,500
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5,500
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Prepaid Insurance
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3,250
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2,500
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Printing Equipment
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60,000
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60,000
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Accumulated Depreciation
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$27,000
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$33,750
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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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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 Payable
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1,500
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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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4,500
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4,500
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Service Revenue
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58,600
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63,000
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Salaries Expense
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10,000
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11,500
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Insurance Expense
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750
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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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6,750
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Art Supplies Expense
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5,000
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8,000
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Rent Expense
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4,000
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4,000
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$117,000
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$117,000
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$128,500
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$128,500
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Instructions;
[A] Journalize the yearly adjusting entries that were made.
[B] Make an income statement & a statement of retained earnings for year ending December 31, 2007, & an unclassified balance sheet at December 31, 2007.
[C] Answer the given questions.
(a) If the useful life of equipment is eight years, calculate the expected salvage life?
(b) If the note has been outstanding three months, calculate the annual interest rate on that note?
(c) If the company paid $12,500 in salaries in 2007, calculate the balance in Salaries Payable on December 31, 2006?