Costello Advertising SpA was founded by Pat Costello in January 2016. Presented below are both the adjusted and unadjusted trial balances as of December 31, 2017.

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, 2017, and a statement of financial position 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 2017, what was the balance in Salaries and Wages Payable on December 31, 2016?

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COSTELLO ADVERTISING SpA Trial Balance December 31, 2017 Unadjusted Adjusted Cr T. Cr Cash Accounts Receivable Supplies Prepaid Insurance Equipment Accumulated Depreciation-Equipment Accounts Payable Interest Payable Notes Payable Unearned Service Revenue Salaries and Wages Payable Share Capital-Ordinary Retained Earnings Dividends Service Revenue Salaries and Wages Expense Insurance Expense Interest Expense Depreciation Expense Supplies Expense Rent Expense 11,000 18,000 8,600 3,350 60,000 11,000 23,500 5,000 2,500 60,000 26,000 5,000 33,000 5,000 150 5,000 5,600 1,300 20,000 5,500 5,000 7,200 20,000 5,500 12,000 10,000 350 12,000 58,600 65,700 11,300 850 500 7,000 3,600 4,000 4,000 127,300 127,300 141,250 141,250