P3-2 (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
TUTORIAL PREVIEW
|
(a) Journalize the annual adjusting entries that
were made. (Omit explanations.)
|
||||
|
Dec 31
|
Accounts Receivable
|
3,500
|
||
|
Service Revenue
|
3,500
|
|||
|
Dec 31
|
Unearned Service Revenue
|
1,400
|
||
|
Service Revenue
|
1,400
|
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