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	35,500
Accounts receivable	43,000
Supplies	3,000
Inventory	63,000
Notes receivable	23,000
Interest receivable	0
Prepaid rent	2,500
Prepaid insurance	9,000
Office equipment	92,000
Accumulated depreciation			34,500
Accounts payable			34,000
Salaries payable			0
Notes payable			53,000
Interest payable			0
Deferred sales revenue			3,500
Common stock			81,000
Retained earnings			36,000
Dividends	7,000
Sales revenue			161,000
Interest revenue			0
Cost of goods sold	85,000
Salaries expense	20,400
Rent expense	12,500
Depreciation expense	0
Interest expense	0
Supplies expense	2,600
Insurance expense	0
Advertising expense	4,500
Totals	403,000		403,000

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

1. Depreciation on the office equipment for the year is $11,500.
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 $1,550.
3. On October 1, 2021, Pastina borrowed $53,000 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 $23,000 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 $9,000 for a one-year fire insurance policy. The entire $9,000 was debited to prepaid insurance.
6. $920 of supplies remained on hand at December 31, 2021.
7. A customer paid Pastina $3,500 in December for 1,500 pounds of spaghetti to be delivered in January 2022. Pastina credited deferred sales revenue.
8. On December 1, 2021, $2,500 rent was paid to the owner of the building. The payment represented rent for December 2021 and January 2022 at $1,250 per month. The entire amount was debited to prepaid rent.

3. Prepare an adjusted trial balance. (Do not round intermediate calculations. Round your final answers to nearest whole dollar.)

Answer 1

Adj TB