Fernetti Advertising Agency, Inc. was founded by John Fernetti in January of 2010. Presented on page 138 are both the adjusted and unadjusted trial balances as of December 31, 2011.
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FERNETTI ADVERTISING AGENCY, INC. Trial Balance December 31, 2011 |
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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 |
20,000 |
22,500 |
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|
Art Supplies |
8,600 |
5,000 |
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|
Prepaid Insurance |
3,350 |
2,500 |
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|
Printing Equipment |
60,000 |
60,000 |
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|
Accumulated Depreciation |
$ 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 Advertising |
7,200 |
5,600 |
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|
Salaries Payable |
–0– |
1,300 |
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|
Common Stock |
25,000 |
25,000 |
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|
Retained Earnings |
500 |
500 |
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|
Dividends |
12,000 |
12,000 |
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|
Advertising Revenue |
58,600 |
62,700 |
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|
Salaries Expense |
10,000 |
11,300 |
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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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|
Art Supplies Expense |
3,600 |
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|
Rent Expense |
4,000 |
4,000 |
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|
$129,300 |
$139,250 |
$139,250 |
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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 ending December 31, 2011, 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 2011, what was the balance in Salaries Payable on December 31, 2010?