Please see the attached file.
Mason Advertising Agency was founded in January 2006. Presented below are both the adjusted and unadjusted trial balances as of December 31, 2010.
MASON ADVERTISING AGENCY
DECEMBER 31, 2010
Dr. Cr. Dr. Cr.
Cash $ 11,000 $ 11,000
Accounts Receivable 20,000 23,500
Art Supplies 8,400 3,000
Prepaid Insurance 3,350 2,500
Printing Equipment 60,000 60,000
Accumulated Depreciation $ 28,000 $ 33,000
Accounts Payable 5,000 5,000
Interest Payable -0- 150
Notes Payable 5,000 5,000
Unearned Advertising Revenue 7,000 5,600
Salaries Payable -0- 1,300
Common Stock 10,000 10,000
Retained Earnings 3,500 3,500
Advertising Revenue 58,600 63,500
Salaries Expense 10,000 11,300
Insurance Expense 850
Interest Expense 350 500
Depreciation Expense 5,000
Art Supplies Expense 5,400
Rent Expense 4,000 4,000
Totals $117,100 $117,100 $127,050 $127,050
(a) Journalize the annual adjusting entries that were made.
(b) Prepare an income statement and a statement of retained earnings for the year ending December 31, 2010, 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 in 2010, what was the balance in Salaries Payable on
December 31, 2009?
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