(Adjusting Entries and Financial Statements) Yount Advertising Agency was founded by Thomas Grant in January 2001. Presented below are both the adjusted and unadjusted trial balances as of December 31, 2005.

(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, 2005, and a 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 $13,500 in salaries in 2005, what was the balance in Salaries Payable on December 31,2004?

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Cash Accounts Receivable Art Supplies Prepaid Insurance Printing Equipment Accumulated Depreciation Accounts Payable Interest Payable Notes Payable YOUNT ADVERTISING AGENCY TRIAL BALANCE DECEMBER 31, 2005 Unadjusted Unearned Advertising Revenue Salaries Payable Common Stock Retained Earnings Advertising Revenue Salaries Expense Insurance Expense Interest Expense Depreciation Expense Art Supplies Expense Rent Expense Dr. $ 11,000 20,000 8,400 3,350 60,000 10,000 350 4,000 $117,100 Cr. $ 28,000 5,000 5,000 7,000 10,000 3,500 58,600 $117,100 Adjusted Dr. $ 11,000 21,500 5,000 2,500 60,000 11,300 850 500 7,000 3,400 4,000 $127,050 Cr. $ 35,000 5,000 150 5,000 5,600 1,300 10,000 3,500 61,500 $127,050