Problem 2-4 Accounting cycle; adjusting entries through post-closing trial balance [LO2-3, 2-5, 2-6, 2-7] [The following information applies to the questions displayed below.] Pastina Company sells various types of pasta to grocery chains as private label brands. The company's fiscal year-end is December 31. The unadjusted trial balance as of December 31, 2018, appears below. Credits Debits 40,950 43,000 1,100 63,000 16,800 1,200 0 64,000 24,000 22,000 46,800 Account Title Cash ccounts receivable Supplies Inventory Note receivable Interest receivable Prepaid rent Prepaid insurance Office equipment Accumulated depreciation-office equipment Accounts payable Salaries and wages payable Note payable Interest payable Deferred revenue Common stock Retained earnings Sales revenue Interest revenue Cost of goods sold Salaries and wages expense Rent expense Depreciation expense Interest expense Supplies expense Insurance expense Advertising expense Totals 60,000 16,000 163,000 73,350 15,600 6,600 600 3,400 2,200 331,800 331,800 Information necessary to prepare the year-end adjusting entries appears below. 1. Depreciation on the office equipment for the year is $8,000. 2. Employee salaries and wages are paid twice a month, on the 22nd for salaries and wages earned from the 1st through the 15th, and on the 7th of the following month for salaries and wages earned from the 16th through the end of the month. Salaries and wages earned from December 16 through December 31, 2018, were $900. 3. On October 1, 2018, Pastina borrowed $46,800 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, 2018, the company lent a supplier $16,800 and a note was signed requiring principal and interest at 8% to be paid on February 28, 2019. 5. On April 1, 2018, the company paid an insurance company $3,400 for a two-year fire insurance policy. The entire $3,400 was debited to insurance expense. 6. $560 of supplies remained on hand at December 31, 2018. 7. A customer paid Pastina $1,080 in December for 900 pounds of spaghetti to be delivered in January 2019. Pastina credited sales revenue. 8. On December 1, 2018, $1,200 rent was paid to the owner of the building. The payment represented rent for December 2018 and January 2019, at $600 per month. 5. Prepare closing entries. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet Record the entry to close the revenue accounts using the income summary. Note: Enter debits before credits. General Journal Debit Credit Date December 31, 2018 Journal entry worksheet Record the entry to close the expense accounts using the income summary. Note: Enter debits before credits. General Journal Debit Credit Date December 31, 2018 Journal entry worksheet
