Question

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		24,000
Accounts receivable		34,000
Supplies		1,600
Inventory		54,000
Note receivable		14,000
Interest receivable		0
Prepaid rent		2,200
Prepaid insurance		0
Office equipment		88,000
Accumulated depreciation—office equipment					33,000
Accounts payable					25,000
Salaries and wages payable					0
Note payable					44,000
Interest payable					0
Deferred revenue					0
Common stock					54,000
Retained earnings					23,080
Sales revenue					142,000
Interest revenue					0
Cost of goods sold		64,000
Salaries and wages expense		18,300
Rent expense		12,100
Depreciation expense		0
Interest expense		0
Supplies expense		1,200
Insurance expense		5,280
Advertising expense		2,400
Totals		321,080			321,080

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

1. Depreciation on the office equipment for the year is $11,000.
2. 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 $1,600.
3. On October 1, 2018, Pastina borrowed $44,000 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, 2018, the company lent a supplier $14,000 and a note was signed requiring principal and interest at 9% to be paid on February 28, 2019.
5. On April 1, 2018, the company paid an insurance company $5,280 for a two-year fire insurance policy. The entire $5,280 was debited to insurance expense.
6. $700 of supplies remained on hand at December 31, 2018.
7. A customer paid Pastina $1,400 in December for 1,320 pounds of spaghetti to be delivered in January 2019. Pastina credited sales revenue.
8. 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:
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.)

Answer 1

Adjusting journal entries are as prepared below:

Date	Particulars	L.F	Amount ($)	Amount ($)
2018
Dec-31	Depreciation Expense		11,000
	Accumulated depreciation			11,000
Dec-31	Salaries and Wages Expense		1,600
	Salaries and Wages Payable			1,600
Dec-31	Interest Expense (44,000*12%*3/12)		1,320
	Interest Payable			1,320
Dec-31	Interest Receivable		1,050
	Interest Income (14,000*9%*10/12)			1,050
Dec-31	Prepaid Insurance		3,300
	Insurance Expense (5,280*15/24)			3,300
Dec-31	Supplies Expense		900
	Supplies			900
Dec-31	Sales Revenue		1,400
	Deferred Revenue			1,400
Dec-31	Rent Expense		1,100
	Prepaid Rent			1,100