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	30,000
Accounts receivable	40,000
Supplies	1,500
Inventory	60,000
Notes receivable	20,000
Interest receivable	0
Prepaid rent	2,000
Prepaid insurance	6,000
Office equipment	80,000
Accumulated depreciation			30,000
Accounts payable			31,000
Salaries payable			0
Notes payable			50,000
Interest payable			0
Deferred sales revenue			2,000
Common stock			60,000
Retained earnings			28,500
Dividends	4,000
Sales revenue			146,000
Interest revenue			0
Cost of goods sold	70,000
Salaries expense	18,900
Rent expense	11,000
Depreciation expense	0
Interest expense	0
Supplies expense	1,100
Insurance expense	0
Advertising expense	3,000
Totals	347,500		347,500

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

1. Depreciation on the office equipment for the year is $10,000.
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 $1,500.
3. On October 1, 2021, Pastina borrowed $50,000 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 $20,000, 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 $6,000 for a one-year fire insurance policy. The entire $6,000 was debited to prepaid insurance.
6. $800 of supplies remained on hand at December 31, 2021.
7. A customer paid Pastina $2,000 in December for 1,500 pounds of spaghetti to be delivered in January 2022. Pastina credited deferred sales revenue.
8. On December 1, 2021, $2,000 rent was paid to the owner of the building. The payment represented rent for December 2021 and January 2022 at $1,000 per month. The entire amount was debited to prepaid rent..

1. & 2. Post the unadjusted 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

	Adjusting entries
Number	Particulars	Debit	Credit
1	Depreciation Expense	10000
	To Accumulated Depreciation		10000
2	Salary Expense	1500
	To Salary payable		1500
3	Interest Expense	1500
	To Interest Payable		1500
4	Interest receivable	1333
	To interest Revenue		1333
5	Insurance Expense	4500
	To Prepaid insurance		4500
6	Goods in Transit	800
	To Cost of Goods Sold		800
7	Deferred Sales Revenue	2000
	To Advance from Customers		2000
8	Rent Expense	1000
	To Prepaid rent		1000

	Ledger Accounts
	Depreciation Expense Account
Adjustment entry NO	Particulars	Amount	Particulars	Amount
1	To Accumulated Depreciation	10000
Accumulated Depreciation Account
Adjustment entry NO	Particulars	Amount	Particulars	Amount
1			By Balance B/d	30000
			By Depreciation Expense	10000
Salary Expense Account
Adjustment entry NO	Particulars	Amount	Particulars	Amount
2	To balance b/d	18900
	To Salaries Payable	1500
	Salaries Payable Account
Adjustment entry NO	Particulars	Amount	Particulars	Amount
2			By Salary expenses	1500
Imterest Expenses Account
Adjustment entry NO	Particulars	Amount	Particulars	Amount
3	To interest Payable	1500
Interest Payable Account
Adjustment entry NO	Particulars	Amount	Particulars	Amount
3			By Interest Payable	1500
Interest Receivable Account
Adjustment entry NO	Particulars	Amount	Particulars	Amount
4	To Interest Revenue	1333
Interest Revenue Account
Adjustment entry NO	Particulars	Amount	Particulars	Amount
4			By Interest Receivable	1333
	Insurance Expense Account
Adjustment entry NO	Particulars	Amount	Particulars	Amount
5	To Prepaid Insurance	4500
	Prepaid Insurance Account
Adjustment entry NO	Particulars	Amount	Particulars	Amount
5	To balance b/d	6000	By Insurane Expense	4500
Cost of Goods sold Account
Adjustment entry NO	Particulars	Amount	Particulars	Amount
6	To Balance b/d	70000	By goods in transit	800
Goods in Transit Account
Adjustment entry NO	Particulars	Amount	Particulars	Amount
6	To Cost of good sold	800
Deferred Sales Revenue Account
Adjustment entry NO	Particulars	Amount	Particulars	Amount
7	To Advance from customers	2000	By Balance b/d	2000
Advance from Customers Account
Adjustment entry NO	Particulars	Amount	Particulars	Amount
7			BY deferred Sales Revenue	2000
	Rent Expense Acount
Adjustment entry NO	Particulars	Amount	Particulars	Amount
8	To Balnce b/d	11000
	To Prepaid Rent account	1000
	Prepaid Rent Account
Adjustment entry NO	Particulars	Amount	Particulars	Amount
8	To Balance b/d	2000	By Rent Expense	1000