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Exercise 3-12 Oriole Design was founded by Thomas Grant in January 2011. Presented below is the adjusted trial balance as of December 31, 2017. ORIOLE DESIGN ADJUSTED TRIAL BALANCE DECEMBER 31, 2017 Debit Credit Cash $11,155 Accounts Receivable 21,655 Supplies 5,155 Prepaid Insurance 2,655 Equipment 60,155 Accumulated Depreciation-Equipment $35,155 Accounts Payable 5,155 Interest Payable 162 Notes Payable 5,400 Unearned Service Revenue 5,755 Salaries and Wages Payable 1,408 Common Stock 10,155 Retained Earnings 3,655 Service Revenue 61,655 Salaries and Wages Expense 11,455 Insurance Expense 958 Interest Expense 162 Depreciation Expense 7,400 Supplies Expenses 3,400 Rent Expense 4,350 $128,500 $128,500 Prepare an income statement for the year ending December 31, 2017. (Enter loss using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) ORIOLE DESIGN Income Statement $ $ $ SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT Prepare a statement of retained earnings for the year ending December 31, 2017. (List items that increase retained earnings first.) ORIOLE DESIGN Statement of Retained Earnings $ : $ SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT Prepare an unclassified balance sheet at December 31. (List assets in order of liquidity.) ORIOLE DESIGN Balance Sheet Assets $ $ : $ Liabilities and Stockholders' Equity $ $ $ SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT Answer the following questions. (Round interest rate to 0 decimal places, e.g. 5%.) (1) If the note has been outstanding 6 months, what is the annual interest rate on that note? (Hint: Assume that the amount of interest payable in the trial balance relates to the note payable in the trial balance.) The annual interest rate % (2) If the company paid $17,500 in salaries and wages in 2017, what was the balance in Salaries and Wages Payable on December 31, 2016? The balance in Salaries and Wages Payable $
Exercise 3-12 Oriole Design was founded by Thomas Grant in January 2011. Presented below is the adjusted trial balance as of December 31, 2017. ORIOLE DESIGN ADJUSTED TRIAL BALANCE DECEMBER 31, 2017 Debit Credit Cash $11,155 Accounts Receivable 21,655 Supplies 5,155 Prepaid Insurance 2,655 Equipment 60,155 Accumulated Depreciation-Equipment $35,155 Accounts Payable 5,155 Interest Payable 162 Notes Payable 5,400 Unearned Service Revenue 5,755 Salaries and Wages Payable 1,408 Common Stock 10,155 Retained Earnings 3,655 Service Revenue 61,655 Salaries and Wages Expense 11,455 Insurance Expense 958 Interest Expense 162 Depreciation Expense 7,400 Supplies Expenses 3,400 Rent Expense 4,350 $128,500 $128,500 Prepare an income statement for the year ending December 31, 2017. (Enter loss using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) ORIOLE DESIGN Income Statement $ $ $ SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT Prepare a statement of retained earnings for the year ending December 31, 2017. (List items that increase retained earnings first.) ORIOLE DESIGN Statement of Retained Earnings $ : $ SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT Prepare an unclassified balance sheet at December 31. (List assets in order of liquidity.) ORIOLE DESIGN Balance Sheet Assets $ $ : $ Liabilities and Stockholders' Equity $ $ $ SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT Answer the following questions. (Round interest rate to 0 decimal places, e.g. 5%.) (1) If the note has been outstanding 6 months, what is the annual interest rate on that note? (Hint: Assume that the amount of interest payable in the trial balance relates to the note payable in the trial balance.) The annual interest rate % (2) If the company paid $17,500 in salaries and wages in 2017, what was the balance in Salaries and Wages Payable on December 31, 2016? The balance in Salaries and Wages Payable $
Answer:Oriole Design as the following Key results, explanation and workings have been shown below:ANet Profit $33,930Closing retained Earnings $37,585Net Assets $47,740Shareholders Equity $47,740B Interest rate on Notes Payable is 1.5%C. Total Wages and Salaries Payable as at Dec 31 2016 =$7,453Explanation:Oriole DesignIncome StatementFor the Year ending December 31 2017Revenue $61,655ExpensesSalaries & Wages $11,455Insurance Expense $958Interest Expense $162Depreciation Expense $7,400Supplies Expense $3,400Rent Expense $4,350Total Expenses = $27,725Net Profit = $33,930Oriole DesignStatement of Retained EarningsFor the Year Ending December 31 2017Opening Balance $3,655Add Net Profit $33,930Closing Retained Earnings = $37,585Oriole DesignBalance SheetAs at December 31st 2017AssetsCash $11,155Accounts Receivable $21,655Supplies $5,155Prepaid Insurance $2,655Equipment $60,155Less Accumulated Depreciation on Equipment -$35,155Total Assets = $65620LiabilitiesAccount Payable $5,155Interest Payable $162Notes Payable $5,400Unearned Service Revenue $5,755Salaries & Wages Payable $1,408Total Liabilities = $17,880Net Assets = $47,740Shareholder's EquityCommon Stock $10,155Closing Retained Earnings $37,585Total Shareholder's Fund =$47,740B. Notes Payable = $5,400Interest Payable = $162Duration of Notes as at December 31 2017 = 6monthsInterest Rate = 162/5400 x 6/12 x 100%=1.5%C.Salaries and Wages Payable Closing Dec 31 2017 = $1,408Salaries and Wages expensed in 2017 = $11,455Salaries and Wages Paid in Cash in 2017 = $17,500Payment relating to Previous Year balance = $17,500 - $11,455 = $6,045Payment outstanding from last year not yet cleared $1,408Total Wages and Salaries Payable as at Dec 31 2016 = $6,045 + $1,408 =$7,453...