R2-D2 Advertising Agency was founded by Thomas Grant in January 1997. Presented here are both the adjusted and unadjusted trial balances as of December 31, 2001.

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 2001, what was the balance in Salaries Payable on December 31, 2000?

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R2-D2 ADVERTISING AGENCY Trial Balance December 31, 2001 Unadjusted Adjusted Dr. Cr. Dr. Cr. Art Supplies Cash Accounts Receivable Prepaid Insurance $ 11,000 $ 11,000 20,000 21,500 8,400 5,000 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 1,300 Common Stock 20,000 20,000