Costello Advertising Agency Inc. was founded by Pat Costello in January of 2013. Presented on the next page are both the adjusted and unadjusted trial balances as of December 31, 2014.

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, 2014, 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 $14,500 in salaries in 2014, what was the balance in Salaries and Wages Payable on December 31,2013?

Transcribed Image Text:

Costello Advertising Agency, Inc. December 3, 2014 Unadjusted Adjusted Cr. Cr. $11,000 23,500 5,000 2,500 60,000 Cash Accounts Receivable Supplics Prepaid Insurance Equipment Accumulated Depreciation-Equipment Accounts Payable Interest Payable Notes Payable Uncarned Service Revenue Salaries and Wages Payable Common Stock Retained Earnings Dividends Scrvice Revenuc Salaries and Wages Expense Insurance Expensoe Interest Expense Depreciation Expense Supplies Expense Rent Expense $11,000 8,600 60,000 2 33,000 5,000 5,000 5,000 5,600 1,300 20,000 5,500 5,000 20,000 12,000 10,000 350 12,000 63,700 11,300 850 5,000 3,600 4,000 4,000 S129,300 $129,300 $139,250 $139,250