3p-2

P3-2 Adjusting Entries and Financial Statements, File 3p-2Yount Advertising Agency was founded in January 2003. Presented below are the adjusted and unadjusted trialbalances as of December 31, 2007:

YOUNT ADVERTISING AGENCY

Trial BalanceDecember 31, 2007UnadjustedDebitCreditCash11,000Accounts Receivable20,000Art Supplies8,400Prepaid Insurance3,350Printing Equipment60,000Accumulated Depreciation - Equip28,000Accounts Payable5,000Interest Payable0Notes Payable5,000Unearned Advertising Revenue7,000Salaries Payable0Common Stock10,000Retained Earnings3,500Advertising Revenue58,600Salaries Expense10,000Insurance ExpenseInterest Expense350Depreciation ExpenseArt Supplies ExpenseRent Expense4,000Totals:$117,100$117,100Instructions:(a) Journalize the annual adjusting entries that were made.Accounts ReceivableDec 31

Unearned Advertising RevenueDec 31

Art SuppliesArt Supplies ExpensePrepaid InsuranceInsurance ExpenseAdjustedDebitCredit11,00021,5005,0002,50060,000

35,0005,0001505,0005,6001,30010,0003,50061,500

11,3008505007,0003,4004,000$127,050$127,0501,5001,4003,4002,9003,400850850Dec 31

Problem 3-2, Page 1 of 3, 2013-7-17, 20:57

Dec 31

Accumulated Depreciation - EquipDepreciation ExpenseSalaries PayableSalaries ExpenseInterest PayableInterest Expense7,0007,0001,3001,300150150Dec 31

Dec 31

Dec 31

(b) Prepare an income statement and a statement of retained earnings for the year ending December 31, 2007, and a balance sheet at December 31.

YOUNT ADVERTISING AGENCY

Income Statement

For the Year Ended December 31, 2007

Revenuesaccounts receivable andExpensesTotal expensesNet incomeYOUNT ADVERTISING AGENCYStatement of Retained EarningsFor the Year Ended December 31, 2007Retained Earnings, Jan 1Add:TitleRetained Earnings, Dec 31YOUNT ADVERTISING AGENCY

Balance SheetDecember 31, 2007

AssetsAccount TitleAccount TitleAccount TitleAccount TitleAccount TitleTotal AssetsAmountAmountAmountAmountAmountAmountFormulaFormulaAmountAmountFormulaProblem 3-2, Page 2 of 3, 2013-7-17, 20:57

Account TitleAccount TitleAccount TitleAccount TitleAccount TitleTotal LiabilitiesLiabilities and Stockholders' EquityAmountAmountAmountAmountAmountFormulaStockholders' EquityAccount TitleAccount TitleTotal liabilities and stockholders' equityAmountAmountFormulaFormula(c) Answer the following questions:

(1) If the note has been outstanding 3 months, what is the annual interest rate on that note?Enter text answer in this area(2) If the company paid $13,500 in salaries in 2007, what was the balance in Salaries Payable on December 31, 2006?Enter text answer in this areaProblem 3-2, Page 3 of 3, 2013-7-17, 20:57