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 reporting year-end is December 31. The unadjusted trial balance as of December 31, 2021, appears below.

   

Account Title Debits Credits
Cash 35,200
Accounts receivable 42,800
Supplies 2,900
Inventory 62,800
Notes receivable 22,800
Interest receivable 0
Prepaid rent 2,400
Prepaid insurance 8,800
Office equipment 91,200
Accumulated depreciation 34,200
Accounts payable 33,800
Salaries payable 0
Notes payable 52,800
Interest payable 0
Deferred sales revenue 3,400
Common stock 79,600
Retained earnings 35,500
Dividends 6,800
Sales revenue 160,000
Interest revenue 0
Cost of goods sold 84,000
Salaries expense 20,300
Rent expense 12,400
Depreciation expense 0
Interest expense 0
Supplies expense 2,500
Insurance expense 0
Advertising expense 4,400
Totals 399,300 399,300

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

  1. Depreciation on the office equipment for the year is $11,400.
  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 $1,450.
  3. On October 1, 2021, Pastina borrowed $52,800 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 $22,800 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 $8,800 for a one-year fire insurance policy. The entire $8,800 was debited to prepaid insurance.
  6. $890 of supplies remained on hand at December 31, 2021.
  7. A customer paid Pastina $3,400 in December for 1,450 pounds of spaghetti to be delivered in January 2022. Pastina credited deferred sales revenue.
  8. On December 1, 2021, $2,400 rent was paid to the owner of the building. The payment represented rent for December 2021 and January 2022 at $1,200 per month. The entire amount was debited to prepaid rent.

Required:

1. & 2. Post the unadjusted balances and adjusting entires into the appropriate t-accounts

Solutions

Expert Solution

1. Adjusting Entries -

2.Ledgers -

3. Adjusted Trial Balance -


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