(Adjusting Entries and Financial Statements) Mason Advertising Agency was founded in January
2008. Presented below are adjusted and unadjusted trial balances as of December 31, 2012.

FREE ADVERTISING AGENCY

Trial Balance

December 31, 2012

Unadjusted

Adjusted

Debit

Credit

Debit

Credit

Cash

$10,000

$10,000

Accounts Receivable

20,200

23,650

Supplies

8,040

2,930

Prepaid Insurance

3,350

2,500

Equipment

62,000

62,000

Accumulated Depreciation - Equipment

$29,000

$33,450

Accounts Payable

6,500

6,500

Interest Payable

0

150

Notes Payable

5,000

5,000

Unearned Service Revenue

7,100

5,550

Salaries and Wages Payable

0

1,300

Common Stock

10,000

10,000

Retained Earnings

3,500

3,500

Service Revenue

58,240

63,130

Salaries and Wages Expense

11,000

11,900

Insurance Expense

850

Interest Expense

350

500

Depreciation Expense

4,450

Supplies Expense

5,400

Rent Expense

4,400

4,400

Totals:

$119,340

$119,340

$128,580

$128,580

Instructions:

(a) Journalize the annual adjusting entries that were made. (Omit explanations.)

Dec 31

Accounts Receivable

Advertising Reveue

Dec 31

Insurance Expense

Prepaid Insurance

Dec 31

Depreciation Expense

Accumulated Depreciation

Dec 31

Account Title

Interest Payable

Dec 31

Unearned Advertising Revenue

Advertising Revenue

Dec 31

Salaries Expense

Salaries Payable

Dec 31

Art Supplies Expense

Art Supplies

(b) Prepare an income statement and a statement of retained earnings for the year ending December 31, 2012, and an unclassified balance sheet at December 31.

FREE ADVERTISING AGENCY

Income Statement

For the Year Ended December 31, 2012

Revenues

Advertising Revenue

Expenses

Salaries Expense

Insuarnce Expense

Interest Expense

Depreciation Expense

Art Supplies Expense

Rent Expense

Total expenses 

0

Net income 

$0

Incorrect

FREE ADVERTISING AGENCY

Statement of Retained Earnings

For the Year Ended December 31, 2012

Retained Earnings, Jan 1

Add:

Net Income

Retained Earnings, Dec 31

FREE ADVERTISING AGENCY

Balance Sheet

December 31, 2012

Assets

Cash

Accounts Receivable

Art Supplies

Prepaid Insurance

Printing Equip,emt

Less: Accumulated Depreciation

0

Total Assets

$0

Incorrect

Liabilities and Stockholders' Equity

Liabilities

Account Payable

Interest Payable

Notes Payable

unearned Advertising Revenue

Salaries Payable

Total Liabilities

$0

Stockholders' Equity

Common Stock

Retained Earnings

0

Total liabilities and stockholders' equity

$0

(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		$11,900	in salaries and wages in 2012, what was the balance in Salaries and
Wages Payable on December 31, 2011?

Answer rating: 100% (QA)

General Guidance Financial Statements Financial statements are a group of reports that presents the ... View the full answer