Listed below are several transactions that took place during the second and third years of operations for the RPG Company.

year2 year3

Amounts billed to customers for services rendered$350,000 $450,000

Cash collected from credit customers 260,000400,000

Payment of rent 80,000 0

Salaries paid to employees for services rendered during the year140,000160,000

Utilities 30,00040,000

Advertising 15,00035,000

In addition, you learn that the company incurred advertising costs of $25,000 in year 2, owed the advertising agency $5,000 at the end of year 1, and there were no liabilities at the end of year 3. Also, there were no anticipated bad debts on receivables, and the rent payment was for a two-year period, year 2 and year 3.

Q. Determine the amount due the advertising agency that would be shown as a liability on RPG's balance sheet at the end of year 2.

Advertising liability at end of Year 2 ?