(Adjusting Entries and Financial Statements) Vedula Advertising Agency was founded by Murali Vedula in January 2007. Presented on the next page are both the adjusted and unadjusted trial balances as of December 31, 2012.
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VEDULA ADVERTISING AGENCY |
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Unadjusted |
Adjusted |
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|
Dr. |
Cr. |
Dr. |
Cr. |
|
|
Cash |
$11,000 |
$11,000 |
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|
Accounts Receivable |
16,000 |
19,500 |
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|
Supplies |
9,400 |
6,500 |
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|
Prepaid Insurance |
3,350 |
1,790 |
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|
Equipment |
60,000 |
60,000 |
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|
Accumulated Depreciation—Equipment |
$25,000 |
$30,000 |
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|
Notes Payable |
8,000 |
8,000 |
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|
Accounts Payable |
2,000 |
2,000 |
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|
Interest Payable |
0 |
560 |
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|
Unearned Service Revenue |
5,000 |
3,100 |
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|
Salaries and Wages Payable |
0 |
820 |
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|
Common Stock |
20,000 |
20,000 |
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|
Retained Earnings |
5,500 |
5,500 |
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|
Dividends |
10,000 |
10,000 |
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|
Service Revenue |
57,600 |
63,000 |
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|
Salaries and Wages Expense |
9,000 |
9,820 |
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|
Insurance Expense |
1,560 |
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|
Interest Expense |
560 |
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|
Depreciation Expense |
5,000 |
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|
Supplies Expense |
2,900 |
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|
Rent Expense |
4,350 |
4,350 |
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|
$123,100 |
$123,100 |
$132,980 |
$132,980 |
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Instructions
(a) Journalize the annual adjusting entries that were made.
(b) Prepare an income statement and a retained earnings statement for the year ended December 31, and a classified balance sheet at December 31.
(c) Identify which accounts should be closed on December 31.
(d) If the note has been outstanding 10 months, what is the annual interest rate on that note?
(e) If the company paid $10,500 in salaries and wages in 2012, what was the balance in Salaries and Wages Payable on December 31, 2011?