Mason Advertising Agency was founded in January 2010. Presented below are adjusted and unadjusted trial balances as of December 31, 2014.

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?

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MASON ADVERTISING AGENCY TRIAL BALANCE DECEMBER 31, 2014 Unadjusted Adjusted Dr. $ 11,000 Cr. Dr. Cr. $ 11,000 Cash Accounts Receivable Supplies Prepaid Insurance Equipment Accumulated Depreciation-Equipment Accounts Payable Interest Payable Notes Payable 20,000 23,500 3,000 8,400 2,500 60,000 3,350 60,000 $ 28,000 $ 33,000 5,000 5,000 -0- 150 5,000 5,000 7,000 Unearned Service Revenue 5,600 1,300 10,000 3,500 63,500 Salaries and Wages Payable -0- Common Stock 10,000 3,500 58,600 Retained Earnings Service Revenue Salaries and Wages Expense Insurance Expense Interest Expense Depreciation Expense Supplies Expense Rent Expense 10,000 11,300 850 350 500 5,000 5,400 4,000 4,000 $117,100 $117,100 $127,050 $127,050