P2-3 and P2-4 (Algo) Adjusting entries, Accounting cycle; adjusting entries through post-closing trial balance [LO2-4, 2-6, 2-7, 2-8]

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Pastina Company sells various types of pasta to grocery chains as private label brands. The company's reporting year-end is December 31. The unadjusted trial balance as of December 31, 2024, appears below.

Account TitleDebitsCreditsCash$ 32,300Accounts receivable40,800Supplies1,900Inventory60,800Notes receivable20,800Interest receivable0Prepaid rent1,300Prepaid insurance6,800Office equipment83,200Accumulated depreciation$ 31,200Accounts payable31,800Salaries payable0Notes payable50,800Interest payable0Deferred sales revenue2,400Common stock65,600Retained earnings30,500Dividends4,800Sales revenue150,000Interest revenue0Cost of goods sold74,000Salaries expense19,300Rent expense11,400Depreciation expense0Interest expense0Supplies expense1,500Insurance expense0Advertising expense3,400Totals$ 362,300$ 362,300

Information necessary to prepare the year-end adjusting entries appears below.

1. Depreciation on the office equipment for the year is $10,400.
2. Employee salaries are paid twice a month, on the 22nd for salaries earned from the 1st through the 15th, and on the 7th of the following month for salaries earned from the 16th through the end of the month. Salaries earned from December 16 through December 31, 2024, were $950.
3. On October 1, 2024, Pastina borrowed $50,800 from a local bank and signed a note. The note requires interest to be paid annually on September 30 at 12%. The principal is due in 10 years.
4. On March 1, 2024, the company lent a supplier $20,800, and a note was signed requiring principal and interest at 8% to be paid on February 28, 2025.
5. On April 1, 2024, the company paid an insurance company $6,800 for a one-year fire insurance policy. The entire $6,800 was debited to prepaid insurance at the time of the payment.
6. $590 of supplies remained on hand on December 31, 2024.
7. The company received $2,400 from a customer in December for 950 pounds of spaghetti to be delivered in January 2025. Pastina credited deferred sales revenue at the time cash was received.
8. On December 1, 2024, $1,300 rent was paid to the owner of the building. The payment represented rent for December 2024 and January 2025 at $650 per month. The entire amount was debited to prepaid rent at the time of the payment.

Problem 2-4 (Algo)

Required:

1 to 3. First, post the unadjusted balances from the unadjusted trial balance that was given and the adjusting entries that were made in Problem 2-3 into the appropriate T-accounts (on the T-accounts tab). Then prepare an adjusted trial balance.

4-a. Prepare an income statement for the year ended December 31, 2024. Assume that no common stock was issued during the year and that $4,800 in cash dividends were paid to shareholders during the year.

4-b. Prepare a statement of shareholders' equity for the year ended December 31, 2024. Assume that no common stock was issued during the year and that $4,800 in cash dividends were paid to shareholders during the year.

4-c. Prepare a classified balance sheet as of December 31, 2024. Assume that no common stock was issued during the year and that $4,800 in cash dividends were paid to shareholders during the year.

5. Prepare closing entries and post to the T-accounts (on the T-accounts tab).

6. Prepare a post-closing trial balance.