Required information Problem 2 4 (Algo) 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 company's reporting year end is December 31 The unadjusted trial balance as of December 31, 2021, appears below Account Title Debits Credits Cash 34,100 Accounts receivable 42,000 Supplies 2,500 Inventory 62,000 Notes receivable 22,000 Interest receivable 0 Prepaid rent 1,900 Prepaid insurance 8,000 Office equipment 88,000 Accumulated depreciation 33,000 Accounts payable 33,000 Salaries payable 0 Notes payable 52,000 Interest payable 0 Deferred sales revenue 3,000 Common stock 74,000 Retained earnings 33,500 Dividends 6,000 Sales revenue 156,000 Interest revenue 0 Cost of goods sold 80,000 Salaries expense 19,900 Rent expense 12,000 Depreciation expense 0 Interest expense 0 Supplies expense 2,100 Insurance expense 0 Advertising expense 4,000 Totals 384,500 384,500 Information necessary to prepare the year end adjusting entries appears below Depreciation on the office equipment for the year is $11,000 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 $1,250 On October 1, 2021, Pastina borrowed $52,000 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 On March 1, 2021, the company lent a supplier $22,000 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 $8,000 for a one year fire insurance policy The entire $8,000 was debited to prepaid insurance $770 of supplies remained on hand at December 31, 2021 A customer paid Pastina $3,000 in December for 1,250 pounds of spaghetti to be delivered in January 2022 Pastina credited deferred sales revenue On December 1, 2021, $1,900 rent was paid to the owner of the building The payment represented rent for December 2021 and January 2022 at $950 per month The entire amount was debited to prepaid rent Problem 2 4 (Algo) 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 $6,000 in cash dividends were paid to shareholders during the year

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Aug 26, 2024

Required information Problem 2-4 (Algo) 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

Required information

Problem 2-4 (Algo) 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 company's reporting year-end is December 31. The unadjusted trial balance as of December 31, 2021, appears below.

Account Title	Debits	Credits
Cash	34,100
Accounts receivable	42,000
Supplies	2,500
Inventory	62,000
Notes receivable	22,000
Interest receivable	0
Prepaid rent	1,900
Prepaid insurance	8,000
Office equipment	88,000
Accumulated depreciation		33,000
Accounts payable		33,000
Salaries payable		0
Notes payable		52,000
Interest payable		0
Deferred sales revenue		3,000
Common stock		74,000
Retained earnings		33,500
Dividends	6,000
Sales revenue		156,000
Interest revenue		0
Cost of goods sold	80,000
Salaries expense	19,900
Rent expense	12,000
Depreciation expense	0
Interest expense	0
Supplies expense	2,100
Insurance expense	0
Advertising expense	4,000
Totals	384,500	384,500

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

Depreciation on the office equipment for the year is $11,000.
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 $1,250.
On October 1, 2021, Pastina borrowed $52,000 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.
On March 1, 2021, the company lent a supplier $22,000 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 $8,000 for a one-year fire insurance policy. The entire $8,000 was debited to prepaid insurance.
$770 of supplies remained on hand at December 31, 2021.
A customer paid Pastina $3,000 in December for 1,250 pounds of spaghetti to be delivered in January 2022. Pastina credited deferred sales revenue.
On December 1, 2021, $1,900 rent was paid to the owner of the building. The payment represented rent for December 2021 and January 2022 at $950 per month. The entire amount was debited to prepaid rent.

Problem 2-4 (Algo) 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 $6,000 in cash dividends were paid to shareholders during the year.