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 as of December 31, 2021, appears below. Account Title Debits Credits Cash 31,400 Accounts receivable 40,200 Supplies 1,600 Inventory 60,200 Notes receivable 20,200 Interest receivable 0 Prepaid rent 1,000 Prepaid insurance 6,200 Office equipment 80,800 Accumulated depreciation 30,300 Accounts payable 31,200 Salaries payable 0 Notes payable 50,200 Interest payable 0 Deferred sales revenue 2,100 Common stock 61,400 Retained earnings 29,000 Dividends 4,200 Sales revenue 147,000 Interest revenue 0 Cost of goods sold 71,000 Salaries expense 19,000 Rent expense 11,100 Depreciation expense 0 Interest expense 0 Supplies expense 1,200 Insurance expense 0 Advertising expense 3,100 Totals 351,200 351,200 Information necessary to prepare the year-end adjusting entries appears below. Depreciation on the office equipment for the year is $10,100. 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 $800. On October 1, 2021, Pastina borrowed $50,200 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 $20,200 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 $6,200 for a one-year fire insurance policy. The entire $6,200 was debited to prepaid insurance. $500 of supplies remained on hand at December 31, 2021. A customer paid Pastina $2,100 in December for 800 pounds of spaghetti to be delivered in January 2022. Pastina credited deferred sales revenue. On December 1, 2021, $1,000 rent was paid to the owner of the building. The payment represented rent for December 2021 and January 2022 at $500 per month. The entire amount was debited to prepaid rent. rev: 09_14_2019_QC_CS-180268, 10_11_2019_QC_CS-184133 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 $4,200 in cash dividends were paid to shareholders during the

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

• Income Statement
• Statement of SE
• Balance Sheet

Prepare the income statement for the year ended December 31, 2021. (Other expenses should be indicated with a minus sign.)

	PASTINA COMPANY Income Statement For the Year Ended December 31, 2021 0 0 0 0 $0

Answer 1

No.	Adjusting Journal Entries	Dr. ($)	Cr. ($)
1	depreciation expenses – office equipment	10100
	To accumulated depreciation expenses – office equipment		10100
2	salaries expenses	800
	To salaries payable		800
3	interest expenses ((50200*12%*3)/12)	1506
	To interest payable		1506
4	interest receivable ((20200*8%*10)/12)	1347
	To interest revenue		1347
5	insurance expenses	4650
	To prepaid insurance		4650
6	supplies expenses	1100
	To supplies		1100
7	no entry
8	rent expenses	500
	To prepaid rent		500

Pastina Company
Income Statement
For the period Dec 31, 2021 (amounts in $)
revenue	147000
interest revenue	1347
cost of goods sold	-71000
gross profit		77347
less expenses
Salaries expense	19800
Rent expense	11600
Depreciation expense	10100
Interest expense	1506
Supplies expense	2300
Insurance expense	4650
Advertising expense	3100
total expenses		53056
net income		24291

Pastina Company
Statement of Stockholders Equity
As of Dec 31, 2021 (amounts in $)
Common stock	61400
retained earnings:
beginning balance	29000
add net income	24291
less dividend	-4200
total stockholders equity balance	110491

Pastina Company
Balance Sheet
As of Dec 31, 2021 (amounts in $)
assets
current assets
cash	31400
accounts receivable	40200
supplies	500
inventory	60200
notes receivable	20200
interest receivable ((20200*8%*10)/12)	1347
prepaid rent	500
prepaid insurance	1550
total current assets		155897
office equipment	80800
accumulated depreciation	40400	40400
total assets		196297
liabilities and stockholders equity
accounts payable	31200
salaries payable	800
interest payable	1506
Deferred sales revenue	2100
total current liabilities		35606
notes payable		50200
total liabilities		85806
stockholders equity		110491
total liabilities and stockholders equity		196297