Journalize the annual adjusting entries

Assignment Help Managerial Accounting
Reference no: EM13555560

Fernetti Advertising Agency, Inc. was founded by John Fernetti in January of 2010. Presented on page 138 are both the adjusted and unadjusted trial balances as of December 31, 2011.

FERNETTI ADVERTISING AGENCY, INC.

Trial Balance

December 31, 2011


Unadjusted

Adjusted


Dr.

Cr.

Dr.

Cr.

Cash

$ 11,000


$ 11,000


Accounts Receivable

20,000


22,500


Art Supplies

8,600


5,000


Prepaid Insurance

3,350


2,500


Printing Equipment

60,000


60,000


Accumulated Depreciation


$ 28,000


$ 34,000

Accounts Payable


5,000


5,000

Interest Payable


-0-


150

Notes Payable


5,000


5,000

Unearned Advertising


7,200


5,600

Salaries Payable


-0-


1,300

Common Stock


25,000


25,000

Retained Earnings


500


500

Dividends

12,000


12,000


Advertising Revenue


58,600


62,700

Salaries Expense

10,000


11,300


Insurance Expense



850


Interest Expense

350


500


Depreciation Expense



6,000


Art Supplies Expense



3,600


Rent Expense

4,000


4,000



$129,300


$139,250

$139,250

Instructions

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

(b) Prepare an income statement and a retained earnings statement for the year ending December 31, 2011, and a balance sheet at December 31.

(c) Answer the following questions.

(1) If the note has been outstanding 6 months, what is the annual interest rate on that note?

(2) If the company paid $12,500 in salaries in 2011, what was the balance in Salaries Payable on December 31, 2010?

Reference no: EM13555560

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