(Adjusting Entries and Financial Statements) Mason Advertising Agency was founded in January 2010. Presented below are adjusted and unadjusted trial balances as of December 31, 2014.
MASON ADVERTISING AGENCY
Trial Balance
December 31, 2014
Unadjusted Adjusted
Debit Credit Debit Credit
Cash $11,000 $11,000
Accounts Receivable 20,000 23,500
Supplies 8,400 3,000
Prepaid Insurance 3,350 2,500
Equipment 60,000 60,000
Accumulated Depreciation - Equipment $28,000 $33,000
Accounts Payable 5,000 5,000
Interest Payable 0 150
Notes Payable 5,000 5,000
Unearned Service Revenue 7,000 5,600
Salaries and Wages Payable 0 1,300
Common Stock 10,000 10,000
Retained Earnings 3,500 3,500
Service Revenue 58,600 63,500
Salaries and Wages Expense 10,000 11,300
Insurance Expense 850
Interest Expense 350 500
Depreciation Expense 5,000
Supplies Expense 5,400
Rent Expense 4,000 4,000
Totals: $117,100 $117,100 $127,050 $127,050
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, 2014 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 2014, what was the balance in Salaries and Wages Payable on December 31, 2013.