Answered step by step
Verified Expert Solution
Question
1 Approved Answer
[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
[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.
- Depreciation on the office equipment for the year is $10,000.
- 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 $1,500.
- 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.
- 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.
- 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.
- $800 of supplies remained on hand at December 31, 2021.
- 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.
- 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.
rev: 09_14_2019_QC_CS-180268
Required: 1. & 2. Post the unadjusted balances and adjusting entires into the appropriate t-accounts.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started