In: Accounting
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 | 33,600 | |||||
Accounts receivable | 41,800 | |||||
Supplies | 2,400 | |||||
Inventory | 61,800 | |||||
Notes receivable | 21,800 | |||||
Interest receivable | 0 | |||||
Prepaid rent | 2,000 | |||||
Prepaid insurance | 6,900 | |||||
Office equipment | 87,200 | |||||
Accumulated depreciation | 32,700 | |||||
Accounts payable | 32,800 | |||||
Salaries payable | 0 | |||||
Notes payable | 51,800 | |||||
Interest payable | 0 | |||||
Deferred sales revenue | 2,900 | |||||
Common stock | 71,700 | |||||
Retained earnings | 33,000 | |||||
Dividends | 5,800 | |||||
Sales revenue | 155,000 | |||||
Interest revenue | 0 | |||||
Cost of goods sold | 79,000 | |||||
Salaries expense | 19,800 | |||||
Rent expense | 11,900 | |||||
Depreciation expense | 0 | |||||
Interest expense | 0 | |||||
Supplies expense | 2,000 | |||||
Insurance expense | 0 | |||||
Advertising expense | 3,900 | |||||
Totals | 379,900 | 379,900 | ||||
Information necessary to prepare the year-end adjusting entries
appears below.
Required: Prepare the necessary December 31, 2021, adjusting journal entries. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Round your final answers to nearest whole dollar amount.)
ANSWER
Year-end adjustments. Year-end adjustments are journal entries made to various general ledger accounts at the end of the fiscal year, to create a set of books that is in compliance with the applicable accounting framework.
The necessary December 31, 2021, adjusting journal entried are
Sl No | Date | Account and Calculation | Debit | credit |
1 | 31-Dec | Depreciation expense | $10,900 | |
Accumulated depreciation-equipment | $10,900 | |||
2 | 31-Dec | Salaries expense | $1,500 | |
Salaries payable | $1,500 | |||
3 | 31-Dec | Interest expense (51800*12%*3/12) | $1,554 | |
Interest payable | $1,554 | |||
4 | 31-Dec | Interest receivable (21800*9%*10/12) | $1,635 | |
Interest revenue | $1,635 | |||
5 | 31-Dec | Insurance expense (6900/24*9) | $2,587.50 | |
Prepaid insurance | $2,587.50 | |||
6 | 31-Dec | Supplies expense (2400-800) | $1,600 | |
Supplies | $1,600 | |||
7 | 31-Dec | No adjusting entry | ||
8 | 31-Dec | Rent expense | $1,000 | |
Prepaid rent | $1,000 |