Delgado Advertising Agency was founded by Maria Delgado in January of 2013. Presented below are both the adjusted and unadjusted trial balances as of December 31, 2014. DELGADO ADVERTISING AGENCY Trial Balance December 31, 2014

Cash

Accounts Receivable Supplies

Prepaid Insurance Equipment

Unadjusted

Adjusted

$ 11,000 20,000 8,600 3,350 60,000

$ 11,000 21,500 4,800 2,500 60,000

Accumulated Depreciation-Equipment

$ 28,000

$ 34,000

Accounts Payable

5,000

5,000

Interest Payable

-0-

150

Notes Payable

5,000

5,000

Unearned Service Revenue

7,200

5,900

Salaries and Wages Payable

-0-

2,100

Owner's Capital

25,500

25,500

Owner's Drawings

12,000

12,000

Service Revenue

58,600

61,400

Salaries and Wages Expense

10,000

12,100

Insurance Expense

850

Interest Expense

350

500

Depreciation Expense

6,000

Supplies Expense

3,800

Rent Expense

4,000

4,000

$129,300

$129,300

$139,050

$139,050

Instructions

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

(b) Prepare an income statement and an owner's equity statement for the year ending December 31, 2014, 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 2014, what was the balance in Salaries and Wages Payable on December 31, 2013?

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