Problem 3 Page 6 Chapter 03 Group Work - STU Beerbo Advertising was founded in January 2013. Presented below are adjusted and unadjusted trial balances as of December 31, 2020 SO Cash Accounts Receivable Supplies Prepaid Insurance Equipment Accum. Depr. - Equip. Accounts Payable Interest Payable Note Payable Unearned Service Revenue Salaries and Wages Payable Common Stock Retained Earnings Service Revenue Salaries and Wages Expense Insurance Expense Interest Expense Depreciation Expense Supplies Expense Rent Expense BEERBO ADVERTISING Trial Balance December 31, 2020 Unadiusted Adjusted DR CR D R CR $ 11,000 $ 11,000 $ 20.000 $ 23,500 $ 8,400 $3,000 $ 3,350 $ 2,500 $ 60,000 $ 60,000 I $ 28,000 $ 33,000 $ 5,000 $ 5,000 $ 150 $5,000 $5,000 $7,000 $ 5,600 SO $ 1,300 $ 10,000 $ 10,000 $ 3,500 $ 3,500 1 $ 58,600 $ 63,500 $10,000 $ 11,300 $ 850 $350 $ 500 I $5,000 S 5,400 $ 4.000 T $117.1001 $117.1001 $1270501 $127050 Instructions: Record the journal entries that show how the UNADJUSTED balances changed to the ADJUSTED balances. Adjusting journal entry for ACCOUNTS RECEIVABLE By how was 'ACCOUNTS RECEIVABLE' adjusted? (in absolute $] What was the nature of the adjustment? [increase / decrease) Below record the adjusting journal entry to recognize the adjustment. Dec Debit Credit Adjusting journal entry for UNEARNED SERVICE REVENUE By how was 'UNEARNED SERVICE REVENUE' adjusted? (in absolute $] What was the nature of the adjustment? [increase / decrease Below, record the adjusting journal entry to recognize the adjustment. Dec Debit Credit Chapter 03 Group Work - STU Problem 3 Page 7 Adjusting journal entry for SUPPLIES By how was 'SUPPLIES' adjusted? [in absolute $ What was the nature of the adjustment? [increase / decrease] Below record the adjusting journal entry to recognize the adjustment. Dec 1 Debit | Credit Adjusting journal entry for depreciation on the equipment By how was 'ACCUMULATED DEPRECIATION - EQUIPMENT' adjusted? [in absolute $] What was the nature of the adjustment? [increase / decrease] Below, record the adjusting journal entry to recognize the adjustment Dec 1 Debit Credit 31 Adjusting journal entry for INTEREST PAYABLE By how was 'INTEREST PAYABLE adjusted? [in absolute $] What was the nature of the adjustment? [increase / decrease] Below, record the adjusting journal entry to recognize the adjustment. Dec 1 1 Debit Credit Adjusting journal entry for PREPAID INSURANCE By how was 'PREPAID INSURANCE' adjusted? [in absolute $] What was the nature of the adjustment? [increase / decrease] Below, record the adjusting journal entry to recognize the adjustment. Dec Ho Ho Ho Ho Debit Credit 31 Adjusting journal entry for SALARIES & WAGES PAYABLE By how was 'SALARIES & WAGES PAYABLE' adjusted? (in absolute $] What was the nature of the adjustment? [increase / decrease Below, record the adjusting journal entry to recognize the adjustment. Dec 1 1 Debit Credit Chapter 03 Group Work - STU Problem 3 Page 8 (b) For the year ending December 31, 2020, prepare: > an income statement, >a statement of retained earnings, and >an unclassified balance sheet. Mason Advertising Income Statement For the Year Ended December 31, 2020 Revenues Expenses Total expenses Net income Mason Advertising Statement of Retained Earnings For the Year Ended December 31, 2020 Add: Chapter 03 Group Work - STU Problem 3 Page 9 Mason Advertising Balance Sheet December 31, 2020 Assets Less: Total assets Liabilities and Stockholders' Equity Liabilities Total liabilities Stockholders' equity Total liabilities and stockholders' equity Chapter 03 Group Work - STU Problem 3 Page 10 (c) Answer the following questions. (1) Assume the note payable has been outstanding 3 months. Answer the questions below to determine the annual interest rate on that note. How much INTEREST PAYABLE appears at year-end? The INTEREST PAYABLE balance covers how many months of accrued interest? How much interest is accrued each month? How many months are there in a year? How much interest would be accrued for an entire year? What is the NOTES PAYABLE balance at year-end? What must be the interest rate on the note payable? (2) Assume the company paid $12,500 in salaries and wages in 2020. Answer the questions below to determine the balance in Salaries and Wages Payable on December 31, 2019 (prior year-end). 2020 2019 DEC JAN - NOV DEC What is the 2020 SAL & WAGES EXP.? What is the 2020 SAL. & WAGES PAYABLE balance? What is JAN-NOV 2020 SAL & WAGES EXP.? How much in salaries and wages were paid in 2020? What is the 2019 SAL. & WAGES PAYABLE balance
