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Grant Advertising: Prepare adjusting entries, income statement, balance sheet

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Grant Advertising Agency Inc. was organized in January 2002. Presented below are both the adjusted and unadjusted trial balances as of December 31, 2002.

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, 2002, 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 $13,500 in salaries in 2002, what was the balance in Salaries Payable on December 31, 2001?

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Solution Summary

The solution presents a thorough explanation for the adjusting entries which were made in the problem but not shown or explained. Also included are templates for the proper format of the financial statements with good discussions about how they are prepared.

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