Of August 31. P3-3A Costello Advertising SpA was founded by Pat Costello in January 2016. Presented below are both the adjusted and unadjusted trial balances as of December 31, 2017. Total assets 203,275 Prepare adjusting entries and financial statements. (LO 5, 6,7) COSTELLO ADVERTISING SpA Trial Balance December 31, 2017 Unadjusted Dr. Cr. Cash 11,000 Accounts Receivable 18,000 Supplies 8,600 Prepaid Insurance 3,350 Equipment 60,000 Accumulated Depreciation--Equipment 26,000 Accounts Payable 5,000 Interest Payable Notes Payable 5,000 Unearned Service Revenue 7,200 -0- Salaries and Wages Payable Share Capital - Ordinary 20,000 Retained Earnings Dividends 12,000 58,600 Service Revenue Salaries and Wages Expense 10,000 Insurance Expense Interest Expense Depreciation Expense Supplies Expense Rent Expense Adjusted Dr. Cr. 11,000 23,500 5,000 2,500 60,000 33,000 5,000 150 5,000 5,600 1,300 20,000 5,500 12,000 65,700 11,300 850 500 7,000 3,600 4,000 141,250 141,250 5,500 350 4,000 127,300 127,300 Instructions (a) Journalize the annual adjusting entries that were made. (b) Prepare an income statement and a retained earnings statement for the year ending (b) Net income 38,450 December 31, 2017, and a statement of financial position at December 31. Ending retained (c) Answer the following questions. earnings 31,950 Total assets 69,000 (1) If the note has been outstanding 6 months, what is the annual interest rate on that note? (c) (1) 6% (2) If the company paid 14,500 in salaries in 2017, what was the balance in Salaries (2) 4,500 and Wages Payable on December 31, 2016? Comnany Ltd. at December 31, 2017, pro- Preparing adjusting entries