Minor Advertising Agency was founded by Brandon Minor in January of 2011. Presented below are both the adjusted and unadjusted trial balances as of December 31, 2012.
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MINOR ADVERTISING AGENCY |
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Trial Balance |
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December 31, 2012 |
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Unadjusted |
Adjusted |
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Dr. |
Cr. |
Dr. |
Cr. |
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Cash |
$ 11,000 |
$ 11,000 |
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Accounts Receivable |
20,000 |
21,500 |
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Supplies |
8,600 |
4,800 |
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Prepaid Insurance |
3,350 |
2,500 |
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Equipment |
60,000 |
60,000 |
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Accumulated Depreciation—Equipment |
$ 28,000 |
$ 34,000 |
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Accounts Payable |
5,000 |
5,000 |
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Interest Payable |
–0– |
150 |
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Notes Payable |
5,000 |
5,000 |
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Unearned Service Revenue |
7,200 |
5,900 |
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Salaries and Wages Payable |
–0– |
2,100 |
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Owner’s Capital |
25,500 |
25,500 |
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Owner’s Drawings |
12,000 |
12,000 |
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Service Revenue |
58,600 |
61,400 |
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Salaries and Wages Expense |
10,000 |
12,100 |
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Insurance Expense |
850 |
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Interest Expense |
350 |
500 |
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Depreciation Expense |
6,000 |
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Supplies Expense |
3,800 |
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Rent Expense |
4,000 |
4,000 |
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$129,300 |
$129,300 |
$139,050 |
$139,050 |
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Instructions
(a) Journalize the annual adjusting entries that were made.
(b) Prepare an income statement and an owner’s equity statement for the year ending December 31, 2012, and a balance sheet at December 31.
(c) Answer the following questions.
(1) If the note has been outstanding 6 months, what is the annual interest rate on that note?
(2) If the company paid $12,500 in salaries in 2012, what was the balance in Salaries and Wages Payable on December 31, 2011?