Mason Advertising was founded in January 2018. Presented below are adjusted and unadjusted trial balances as of December 31, 2025.

Instructions

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

b. Prepare an income statement and a retained earnings statement for the year ending December 31, 2025, 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 2025, what was the balance in Salaries and Wages Payable on December 31, 2024?

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Cash Accounts Receivable Supplies Prepaid Insurance Equipment Accumulated Depreciation-Equipment Accounts Payable Interest Payable Notes Payable Unearned Service Revenue Salaries and Wages Payable Common Stock Retained Earnings Service Revenue Salaries and Wages Expense Insurance Expense Interest Expense Mason Advertising Trial Balance December 31, 2025 Depreciation Expense Supplies Expense Rent Expense Unadjusted Dr. $ 11,000 20,000 8,400 3,350 60,000 10,000 350 4,000 $117,100 Cr. $28,000 5,000 5,000 7,000 -0- 10,000 3,500 58,600 Adjusted Dr. $ 11,000 23,500 3,000 2,500 60,000 11,300 850 500 Cr. $ 33,000 5,000 150 5,000 5,600 1,300 10,000 3,500 63,500 5,000 5,400 4,000 $117,100 $127,050 $127,050