Question

In: Accounting

Pastina Company sells various types of pasta to grocery chains as private label brands. The company's...

Pastina Company sells various types of pasta to grocery chains as private label brands. The company's fiscal year-end is December 31. The unadjusted trial balance as of December 31, 2018, appears below.

Account Title

Debits

Credits

Cash

32,000

Accounts receivable

42,000

Supplies

1,400

Inventory

62,000

Note receivable

22,000

Interest receivable

0

Prepaid rent

2,400

Prepaid insurance

0

Office equipment

96,000

Accumulated depreciation—office equipment

36,000

Accounts payable

33,000

Salaries and wages payable

0

Note payable

52,000

Interest payable

0

Deferred revenue

0

Common stock

62,000

Retained earnings

39,540

Sales revenue

150,000

Interest revenue

0

Cost of goods sold

72,000

Salaries and wages expense

19,100

Rent expense

13,200

Depreciation expense

0

Interest expense

0

Supplies expense

1,000

Insurance expense

6,240

Advertising expense

3,200

Totals

372,540

372,540


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

Depreciation on the office equipment for the year is $12,000.

Employee salaries and wages are paid twice a month, on the 22nd for salaries and wages earned from the 1st through the 15th, and on the 7th of the following month for salaries and wages earned from the 16th through the end of the month. Salaries and wages earned from December 16 through December 31, 2018, were $1,400.

On October 1, 2018, Pastina borrowed $52,000 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, 2018, the company lent a supplier $22,000 and a note was signed requiring principal and interest at 9% to be paid on February 28, 2019.

On April 1, 2018, the company paid an insurance company $6,240 for a two-year fire insurance policy. The entire $6,240 was debited to insurance expense.

$900 of supplies remained on hand at December 31, 2018.

A customer paid Pastina $2,200 in December for 1,560 pounds of spaghetti to be delivered in January 2019. Pastina credited sales revenue.

On December 1, 2018, $2,400 rent was paid to the owner of the building. The payment represented rent for December 2018 and January 2019, at $1,200 per month.


Required:
Prepare the necessary December 31, 2018, 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.)

Solutions

Expert Solution

The folllowing adjusting entries will be prepared to record the given information:

Account Titles and Explanation Debit Credit
Depreciation expense - Office equipment 12000
      Accumulated depreciation - Office equipment 12000
To record depreciation on office equipment.
Wages and salaries expense 1400
      Wages and salaries payable 1400
To record outstanding wages.
Interest Expense (52000 x 12% x 3/12) 1560
      Interest Payable 1560
To record accrued ionterest expense.
Interest receivable (22000 x 9% x 10/12) 1650
      Interest revenue 1650
To record accrued interest revenue.
Prepaid insurance (6240 x 15/24) 3900
      Insurance expense 3900
To record prepaid insurance.
Supplies expense (1400 - 900) 500
      Supplies 500
To record supplies expense.
Sales revenue 2200
      Unearned sales revenue 2200
To record unearned revenue.
Rent expense 1200
      Prepaid rent 1200
To record rent expense for December.

Related Solutions

Pastina Company sells various types of pasta to grocery chains as private label brands. The company's...
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...
Pastina Company sells various types of pasta to grocery chains as private label brands. The company's...
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 33,500 Accounts receivable 41,600 Supplies 2,300 Inventory 61,600 Notes receivable 21,600 Interest receivable 0 Prepaid rent 1,700 Prepaid insurance 7,600 Office equipment 86,400 Accumulated depreciation 32,400 Accounts payable 32,600 Salaries payable 0 Notes payable 51,600 Interest payable 0 Deferred sales revenue 2,800...
Pastina Company sells various types of pasta to grocery chains as private label brands. The company's...
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 31,700 Accounts receivable 40,400 Supplies 1,700 Inventory 60,400 Notes receivable 20,400 Interest receivable 0 Prepaid rent 1,100 Prepaid insurance 6,400 Office equipment 81,600 Accumulated depreciation 30,600 Accounts payable 31,400 Salaries payable 0 Notes payable 50,400 Interest payable 0 Deferred sales revenue 2,200...
Pastina Company sells various types of pasta to grocery chains as private label brands. The company's...
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 31,700 Accounts receivable 40,400 Supplies 1,700 Inventory 60,400 Notes receivable 20,400 Interest receivable 0 Prepaid rent 1,100 Prepaid insurance 6,400 Office equipment 81,600 Accumulated depreciation 30,600 Accounts payable 31,400 Salaries payable 0 Notes payable 50,400 Interest payable 0 Deferred sales revenue 2,200...
Pastina Company sells various types of pasta to grocery chains as private label brands. The company's...
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 31,700 Accounts receivable 40,400 Supplies 1,700 Inventory 60,400 Notes receivable 20,400 Interest receivable 0 Prepaid rent 1,100 Prepaid insurance 6,400 Office equipment 81,600 Accumulated depreciation 30,600 Accounts payable 31,400 Salaries payable 0 Notes payable 50,400 Interest payable 0 Deferred sales revenue 2,200...
Pastina Company sells various types of pasta to grocery chains as private label brands. The company's...
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...
Pastina Company sells various types of pasta to grocery chains as private label brands. The company's...
Pastina Company sells various types of pasta to grocery chains as private label brands. The company's fiscal year-end is December 31. The unadjusted trial balance as of December 31, 2018, appears below.     Account Title Debits Credits Cash 45,650 Accounts receivable 58,000 Supplies 1,850 Inventory 77,000 Note receivable 29,400 Interest receivable 0 Prepaid rent 2,700 Prepaid insurance 0 Office equipment 94,000 Accumulated depreciation—office equipment 35,250 Accounts payable 37,000 Salaries and wages payable 0 Note payable 71,400 Interest payable 0 Deferred...
Pastina Company sells various types of pasta to grocery chains as private label brands. The company's...
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 36,400 Accounts receivable 43,600 Supplies 3,300 Inventory 63,600 Notes receivable 23,600 Interest receivable 0 Prepaid rent 2,800 Prepaid insurance 9,600 Office equipment 94,400 Accumulated depreciation 35,400 Accounts payable 34,600 Salaries payable 0 Notes payable 53,600 Interest payable 0 Deferred sales revenue 3,800...
Pastina Company sells various types of pasta to grocery chains as private label brands. The company's...
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 36,100 Accounts receivable 43,400 Supplies 3,200 Inventory 63,400 Notes receivable 23,400 Interest receivable 0 Prepaid rent 2,700 Prepaid insurance 9,400 Office equipment 93,600 Accumulated depreciation 35,100 Accounts payable 34,400 Salaries payable 0 Notes payable 53,400 Interest payable 0 Deferred sales revenue 3,700 Common...
Pastina Company sells various types of pasta to grocery chains as private label brands. The company's...
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 33,800 Accounts receivable 41,800 Supplies 2,400 Inventory 61,800 Notes receivable 21,800 Interest receivable 0 Prepaid rent 1,800 Prepaid insurance 7,800 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...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT