Adjusting Entries and Financial Statements Sorenstam Advertising Corp. was founded in January 2006. Presented below are the adjusted and unadjusted trial balances as of December 31, 2010.

Instructions
(a) Journalize the annual adjusting entries that were made. (Omit explanations.)
(b) Prepare an income statement and a retained earnings statement for the year ending December 31, 2010, and an unclassified statement of financial position at December 31. 2010.
(c) Answer the following questions.
(1) If the useful life of printing equipment is 6 years, what is the expected residual value?
(2) If the note has been outstanding 3 months, what is the annual interest rate on that note?
(3) If the company paid $12,500 in salaries in 2010, what was the balance in Salaries Payable on December 31,2009?

Transcribed Image Text:

SORENSTAM ADVERTISING CORP. TRIAL BALANCE DECEMBER 31, 2010 Unadjusted Cr. Adjusted Dr. € 7,000 Dr. Cr. € 7,000 Cash Accounts Receivable 19,000 8,500 3,250 60,000 20,000 Art Supplies Prepaid Insurance Printing Equipment Accumulated Depreciation Accounts Payable Intorest Payabie Notes Payable Unearned Service Rovenue 3,500 2,500 60,000 € 27,000 5,000 € 35,750 5,000 150 5,000 7.000 5,000 5,600 1,500 Salaries Payable Share Capital-Ordinary Retained Earnings Service Revenue 10,000 4,500 58,600 10,000 4,500 61,000 10,000 11,500 Salaries Expense Insurance Expense Interest Expense Depreciation Expense Art Supplies Expense Rent Expense 750 350 500 8,750 10,000 5,000 4,000 €117,100 4,000 €117,100 €128,500 €128,500