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.

6. Prepare a post-closing trial balance. (Do not round intermediate calculations. Round your final answers to nearest whole dollar.)

Answer 1

Answer.

Step 1. Un-adjusted Trial Blance is prepared as given in the question.

Step 2. All adjustemts entries are recorded in adjustments coulumn.

Step 3. Adjusted Trail Balance is prepared from from un-adjusted trial balance and adjustments.

Step 4. All revenue and expenses (temprory accounts) are closed to income summary.

Step 5. Income Summary and dividends (temporary accounts) are closed to Retained earnings.

Step 6. Post Closing Trial Balance is prepared from remaining ledger balances that are not temporary accounts.

Answer. Post Closing Trial Balance is in Last Column
Account Tittle	Un-adj. T. Bal.	Adjustments	Adj. Trial Bal.	Income Statement	Post Closing Trial Bal.
Debit	Credit	Debit	Credit	Debit	Credit	Debit	Credit	Debit	Credit
Cash	$   35,500				$ 35,500				$ 35,500
Account Receivable	$   43,000				$ 43,000				$ 43,000
Supplies	$     3,000			$   2,080	$       920				$      920
Inventory	$   63,000				$ 63,000				$ 63,000
Notes Receivables	$   23,000				$ 23,000				$ 23,000
Interest Receivable	$          -		$ 1,533		$    1,533				$    1,533
Prepaid Rent	$     2,500			$   1,250	$    1,250				$    1,250
Prepaid Insurance	$     9,000			$   6,750	$    2,250				$    2,250
Office Equipment	$   92,000				$ 92,000				$ 92,000
Accumulated Depreciation		$ 34,500		$ 11,500		$   46,000				$   46,000
Accounts Payable		$ 34,000				$   34,000				$   34,000
Salaries Payable		$         -		$   1,550		$     1,550				$     1,550
Notes Payable		$ 53,000				$   53,000				$   53,000
Interest Payable		$         -		$   1,590		$     1,590				$     1,590
Deferred Sales Revenue		$    3,500				$     3,500				$     3,500
Common Stock		$ 81,000				$   81,000				$   81,000
Retained Earnings		$ 36,000				$   36,000				$   41,813
Dividends	$     7,000				$    7,000
Sales Revenue		$1,61,000				$ 1,61,000		$1,61,000
Interest Revenue				$   1,533		$     1,533		$     1,533
Cost of Goods sold	$   85,000				$ 85,000		$   85,000
Salaries Expense	$   20,400		$ 1,550		$ 21,950		$   21,950
Rent Expense	$   12,500		$ 1,250		$ 13,750		$   13,750
Depreciation Expense	$          -		$11,500		$ 11,500		$   11,500
Interest Expense	$          -		$ 1,590		$    1,590		$     1,590
Supplies Expense	$     2,600		$ 2,080		$    4,680		$     4,680
Insurance Expense	$          -		$ 6,750		$    6,750		$     6,750
Advertising Expense	$     4,500				$    4,500		$     4,500
Total	$ 4,03,000	$4,03,000	$26,253	$ 26,253	$4,19,173	$ 4,19,173	$1,49,720	$1,62,533	$   2,62,453	$2,62,453
Net Income		$   12,813

Working Notes:

1. Supplies Expense = 3,000 - 920 = 2,080

2. Interest Receivable = 23,000 x 0.08 x 10/12 = 1,533

3. Rent Expense = 2,500 x 1/2 = 1,250

4. Insurance Expense = 9,000 x 9/12 = 6,750

5. Interest expense = 53,000 x 0.12 x 3/12 = 1,590

6. Salaries payable for 2nd half of december is 1,550 and Depreciation expense for the year is 11,500.