Question
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
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, 2021, appears below.
Account Title | Debits | Credits | ||
Cash | 32,000 | |||
Accounts receivable | 40,600 | |||
Supplies | 1,800 | |||
Inventory | 60,600 | |||
Notes receivable | 20,600 | |||
Interest receivable | 0 | |||
Prepaid rent | 1,200 | |||
Prepaid insurance | 6,600 | |||
Office equipment | 82,400 | |||
Accumulated depreciation | 30,900 | |||
Accounts payable | 31,600 | |||
Salaries payable | 0 | |||
Notes payable | 50,600 | |||
Interest payable | 0 | |||
Deferred sales revenue | 2,300 | |||
Common stock | 64,200 | |||
Retained earnings | 30,000 | |||
Dividends | 4,600 | |||
Sales revenue | 149,000 | |||
Interest revenue | 0 | |||
Cost of goods sold | 73,000 | |||
Salaries expense | 19,200 | |||
Rent expense | 11,300 | |||
Depreciation expense | 0 | |||
Interest expense | 0 | |||
Supplies expense | 1,400 | |||
Insurance expense | 0 | |||
Advertising expense | 3,300 | |||
Totals | 358,600 | 358,600 | ||
Information necessary to prepare the year-end adjusting entries appears below.
- Depreciation on the office equipment for the year is $10,300.
- 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, 2021, were $900.
- On October 1, 2021, Pastina borrowed $50,600 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.
- On March 1, 2021, the company lent a supplier $20,600 and a note was signed requiring principal and interest at 8% to be paid on February 28, 2022.
- On April 1, 2021, the company paid an insurance company $6,600 for a two-year fire insurance policy. The entire $6,600 was debited to prepaid insurance.
- $560 of supplies remained on hand at December 31, 2021.
- A customer paid Pastina $2,300 in December for 900 pounds of spaghetti to be delivered in January 2022. Pastina credited deferred sales revenue.
- On December 1, 2021, $1,200 rent was paid to the owner of the building. The payment represented rent for December 2021 and January 2022 at $600 per month. The entire amount was debited to prepaid rent.
4. Prepare an income statement and a statement of shareholders equity for the year ended December 31, 2021, and a classified balance sheet as of December 31, 2021. Assume that no common stock was issued during the year and that $4,600 in cash dividends were paid to shareholders during the year. _____________________________________________________________________________________________________________________________________________________
Prepare the income statement for the year ended December 31, 2021. (Other expenses should be indicated with a minus sign.)
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_____________________________________________________________
Prepare the statement of shareholders' equity for the year ended December 31, 2021.
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__________________________________________________________________________________________________________
Prepare the classified balance sheet for the year ended December 31, 2021. (Amounts to be deducted should be indicated by a minus sign.)
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