Question

[The following information applies to the questions displayed below.] 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 41,750 Accounts receivable 53,000 Supplies 1,600 Inventory 72,000 Note receivable 24,900 Interest receivable 0 Prepaid rent 2,200 Prepaid insurance 0 Office equipment 84,000 Accumulated depreciation—office equipment 31,500 Accounts payable 32,000 Salaries and wages payable 0 Note payable 60,900 Interest payable 0 Deferred revenue 0 Common stock 60,000 Retained earnings 20,500 Sales revenue 208,000 Interest revenue 0 Cost of goods sold 93,600 Salaries and wages expense 18,300 Rent expense 12,100 Depreciation expense 0 Interest expense 0 Supplies expense 1,050 Insurance expense 5,200 Advertising expense 3,200 Totals 412,900 412,900 Information necessary to prepare the year-end adjusting entries appears below. Depreciation on the office equipment for the year is $10,500. 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 $1,350. On October 1, 2018, Pastina borrowed $60,900 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 $24,900 and a note was signed requiring principal and interest at 8% to be paid on February 28, 2019. On April 1, 2018, the company paid an insurance company $5,200 for a two-year fire insurance policy. The entire $5,200 was debited to insurance expense. $830 of supplies remained on hand at December 31, 2018. A customer paid Pastina $1,620 in December for 1,350 pounds of spaghetti to be delivered in January 2019. Pastina credited sales revenue. On December 1, 2018, $2,200 rent was paid to the owner of the building. The payment represented rent for December 2018 and January 2019, at $1,100 per month. Required: 1. & 2. Post the opening balances and adjusting entires into the appropriate t-accounts. (Enter the number of the adjusting entry in the column next to the amount. Do not round intermediate calculations. Round your final answers to nearest whole dollar.)

Answer 1

Solution:

1 & 2) Posting the Opening Balances and Adjusting Entries into the Appropriate T-Accounts:

Cash
Beg. Bal.	41,750
End. Bal.	41,750

Accounts Receivable
Beg. Bal.	53,000
End. Bal.	53,000

Prepaid Rent
Beg. Bal.	2,200
		1,100	8
End. Bal.	1,100

Prepaid Insurance
Beg. Bal.	0
5	3,250
End. Bal.	3,250

Supplies
Beg. Bal.	1,600
		770	6
End. Bal.	830

Inventory
Beg. Bal.	72,000
End. Bal.	72,000

Notes Receivable
Beg. Bal.	24,900
End. Bal.	24,900

Office Equipment
Beg. Bal.	84,000
End. Bal.	84,000

Accumulated Depreciation - Office Equipment
		31,500	Beg. Bal.
		10,500	1
		42,000	End. Bal.

Accounts Payable
		32,000	Beg. Bal.
		32,000	End. Bal.

Salaries and Wages Payable
		0	Beg. Bal.
		1,350	2
		1,350	End. Bal.

Notes Payable
		60,900	Beg. Bal.
		60,900	End. Bal.

Interest Payable
		0	Beg. Bal.
		1,827	3
		1,827	End. Bal.

Deferred Revenue
		0	Beg. Bal.
		1,620	7
		1,620	End. Bal.

Common Stock
		60,000	Beg. Bal.
		60,000	End. Bal.

Retained Earnings
		20,500	Beg. Bal.
		20,500	End. Bal.

Sales Revenue
		208,000	Beg. Bal.
7	1,620
		206,380	End. Bal.

Interest Revenue
		0	Beg. Bal.
		1,660	4
		1,660	End. Bal.

Cost of Goods Sold
Beg. Bal.	93,600
End. Bal.	93,600

Salaries and Wages Expense
Beg. Bal.	18,300
2	1,350
End. Bal.	19,650

Rent Expense
Beg. Bal.	12,100
8	1,100
End. Bal.	13,200

Depreciation Expense
Beg. Bal.	0
1	10,500
End. Bal.	10,500

Interest Expense
Beg. Bal.	0
3	1,827
End. Bal.	1,827

Supplies Expense
Beg. Bal.	1,050
6	830
End. Bal.	1,880

Insurance Expense
Beg. Bal.	5,200
		3,250	5
End. Bal.	1,950

Advertising Expense
Beg. Bal.	3,200
End. Bal.	3,200