Minor Advertising Agency was founded by Brandon Minor in January of 2011. Presented below are both the adjusted and unadjusted trial balances as of December 31, 2012.

Instructions

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

(b) Prepare an income statement and an owner's equity statement for the year ending December 31, 2012, 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 $12,500 in salaries in 2012, what was the balance in Salaries and Wages Payable on December 31,2011?

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MINOR ADVERTISING AGENCY Trial Balance December 31, 2012 Unadjusted Adjusted Dr. Cr. Dr. Cr. $ 11,000 20,000 $ 11,000 21,500 Cash Accounts Receivable Supplies Prepaid Insurance Equipment Accumulated Depreciation-Equipment Accounts Payable Interest Payable Notes Payable 8,600 4,800 3,350 2,500 60,000 60,000 $ 28,000 $ 34,000 5,000 5,000 -0- 150 5,000 5,000 Unearned Service Revenue 7,200 5,900 Salaries and Wages Payable Owner's Capital Owner's Drawings -0- 2,100 25,500 25,500 12,000 12,000 Service Revenue 58,600 61,400 Salaries and Wages Expense Insurance Expense Interest Expense Depreciation Expense Supplies Expense Rent Expense 10,000 12,100 850 350 500 6,000 3,800 4,000 4,000 $129,300 $129,300 $139,050 $139,050