Grant Advertising Agency was founded by Thomas Grant in January 1994. Presented here are both the adjusted and unadjusted trial balances as of December 31, 1998.

\section*{Instructions}

(a) Journalize the annual adjusting entries that were made

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

(c) Identify which accounts should be closed on December 31.

(d) If the note has been outstanding 3 months, what is the annual interest rate on that note?

(e) If the company paid \(\$ 13,500\) in salaries in 1998, what was the balance in Salaries Payable on December 31, 1997?

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GRANT ADVERTISING AGENCY Trial Balance December 31, 1998 Unadjusted Dr. Cash Accounts Receivable Art Supplies $ 11,000 20,000 Adjusted Cr. Dr. Cr. $ 11,000 21,000 8,400 5,000 Prepaid Insurance 3,350 2,500 Printing Equipment 60,000 60,000 Accumulated Depreciation Accounts Payable $ 28,000 5,000 $ 35,000 5,000 Notes Payable Interest Payable Unearned Advertising Revenue Salaries Payable 0 150 5,000 5,000 7,000 5,600 0 1,800 Common Stock 20,000 20,000 Retained Earnings 5,500 5,500 Dividends 12,000 12,000 Advertising Revenue 58,600 61,000 Salaries Expense 10,000 11,800 Insurance Expense 850 Interest Expense 350 500 Depreciation Expense 7,000 Art Supplies Expense 3,400 Rent Expense 4,000 4,000 $129,100 $129,100 $139,050 $139,050