Problem 2-4 (Static) Accounting cycle; adjusting entries through post-closing trial balance [LO2-4, 2-6, 2-7, 2-8]

[The following information applies to the questions displayed below.]

Pastina Company sells various types of pasta to grocery chains as private label brands. The companys reporting year-end is December 31. The unadjusted trial balance as of December 31, 2021, appears below.

Account Title	Debits		Credits
Cash	30,000
Accounts receivable	40,000
Supplies	1,500
Inventory	60,000
Notes receivable	20,000
Interest receivable	0
Prepaid rent	2,000
Prepaid insurance	6,000
Office equipment	80,000
Accumulated depreciation			30,000
Accounts payable			31,000
Salaries payable			0
Notes payable			50,000
Interest payable			0
Deferred sales revenue			2,000
Common stock			60,000
Retained earnings			28,500
Dividends	4,000
Sales revenue			146,000
Interest revenue			0
Cost of goods sold	70,000
Salaries expense	18,900
Rent expense	11,000
Depreciation expense	0
Interest expense	0
Supplies expense	1,100
Insurance expense	0
Advertising expense	3,000
Totals	347,500		347,500

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

1. Depreciation on the office equipment for the year is $10,000.
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, 2021, were $1,500.
3. On October 1, 2021, Pastina borrowed $50,000 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, 2021, the company lent a supplier $20,000, and a note was signed requiring principal and interest at 8% to be paid on February 28, 2022.
5. On April 1, 2021, the company paid an insurance company $6,000 for a one-year fire insurance policy. The entire $6,000 was debited to prepaid insurance.
6. $800 of supplies remained on hand at December 31, 2021.
7. A customer paid Pastina $2,000 in December for 1,500 pounds of spaghetti to be delivered in January 2022. Pastina credited deferred sales revenue.
8. On December 1, 2021, $2,000 rent was paid to the owner of the building. The payment represented rent for December 2021 and January 2022 at $1,000 per month. The entire amount was debited to prepaid rent.

Problem 2-4 (Static) Part 4

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 $4,000 in cash dividends were paid to shareholders during the year.

Answer is not complete.

Complete this question by entering your answers in the tabs below.

• Income Statement
• Statement of SE
• Balance Sheet

Prepare the classified balance sheet for the year ended December 31, 2021. (Amounts to be deducted should be indicated by a minus sign.)

PASTINA COMPANY
Balance Sheet
At December 31, 2021
Assets
Current assetsselected answer correct
Cashselected answer correct	not attempted	$30,000selected answer correct
Accounts receivableselected answer correct	not attempted	40,000selected answer correct
Suppliesselected answer correct	not attempted	800selected answer correct
Inventoryselected answer correct	not attempted	60,000selected answer correct
Notes receivableselected answer correct	not attempted	20,000selected answer correct
Interest receivableselected answer correct	not attempted	1,333selected answer correct
Prepaid insuranceselected answer correct	not attempted	1,500selected answer correct
Prepaid rentselected answer correct	not attempted	1,000selected answer correct
not attempted	not attempted	not attempted
not attempted	not attempted	not attempted
Total current assetsselected answer correct		154,633
Office equipmentselected answer correct	$80,000selected answer correct
Accumulated depreciationselected answer correct	(40,000)selected answer correct
not attempted	not attempted	40,000
Total assetsselected answer correct		$194,633
Liabilities and Shareholders' Equity
not attempted
Accounts payableselected answer correct	31,000selected answer incorrect	not attempted
Salaries payableselected answer correct	1,500selected answer incorrect	not attempted
Interest payableselected answer correct	1,500selected answer incorrect	not attempted
Deferred sales revenueselected answer correct	2,000selected answer incorrect	not attempted
not attempted	not attempted	36,000selected answer incorrect
Total current liabilitiesselected answer correct		36,000
Notes payableselected answer correct		50,000selected answer correct
not attempted
Total liabilitiesselected answer correct		86,000
not attempted
not attempted	not attempted
not attempted	not attempted
not attempted	not attempted
Total liabilities and shareholders' equityselected answer incorrect		0
not attempted		$86,000