Question

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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.

rev: 09_14_2019_QC_CS-180268

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

Answer 1

JOURNAL ENTRY
Date	Particulars	Debit	Credit
	Depreciation Expense A/C                                                               Dr.	$10,000
	To Accumulated Depreciation A/C		$10,000
	(Depreciation Charged on office equipment)
	Salaries A/C                                                                                          Dr.	$1,500
	To Salaries Payable A/C		$1,500
	(Salaries payable on the 7th of the next month)
	Interest expense A/C                                                                      Dr.	$1,500
	To Interest Payable A/C		$1,500
	(Interest due for the borrowed money)
	Interest Receivables A/C                                                              Dr.	$1,333
	To Interest Revenue A/C		$1,333
	(Interest Receivable for the money lent)
	Insurance Expense A/C                                                                   Dr.	$4,500
	To Prepaid Insurance A/C		$4,500
	(Insurance premium paid for one year)
	Supplies Expense A/C                                                                    Dr.	$700
	To Supplies A/C		$700
	(Supplies at the end was $800)
	Rent Expense A/C                                                                            Dr.	$1,000
	To Prepaid Rent A/C		$1,000
	(Paid rent for the december month)

LEDGER
Cash A/C
Date	Particulars	Amount	Date	Particulars	Amount
	To Balance B/F	$30,000		By Balance C/F	$30,000
	Total	$30,000		Total	$30,000
Accounts Receivables A/C
Date	Particulars	Amount	Date	Particulars	Amount
	To Balance B/F	$40,000		By Balance C/F	$40,000
	Total	$40,000		Total	$40,000
Supplies A/C
Date	Particulars	Amount	Date	Particulars	Amount
	To Balance B/F	$1,500		By Supplies Expense A/C	$700
				By Balance C/F	$800
	Total	$1,500		Total	$1,500
Inventory A/C
Date	Particulars	Amount	Date	Particulars	Amount
	To Balance B/F	$60,000		By Balance C/F	$60,000
	Total	$60,000		Total	$60,000
Notes Receivables A/C
Date	Particulars	Amount	Date	Particulars	Amount
	To Balance B/F	$20,000		By Balance C/F	$20,000
	Total	$20,000		Total	$20,000
Interest Receivables A/C
Date	Particulars	Amount	Date	Particulars	Amount
	To Interest Revenue A/C	$1,333		By Balance C/F	$1,333
	Total	$1,333		Total	$1,333
Prepaid Rent A/C
Date	Particulars	Amount	Date	Particulars	Amount
	To Balance B/F	$2,000		By Rent Expense A/C	$1,000
				By Balance C/F	$1,000
	Total	$2,000		Total	$2,000
Prepaid Insurance A/C
Date	Particulars	Amount	Date	Particulars	Amount
	To Balance A/C	$6,000		By Insurance Expense A/C	$4,500
				by Balancce C/F	$1,500
	Total	$6,000		Total	$6,000
Office Equipment A/C
Date	Particulars	Amount	Date	Particulars	Amount
	To Balance B/F	$80,000		By Balance C/F	$80,000
	Total	$80,000		Total	$80,000
Accumulated Depreciation A/C
Date	Particulars	Amount	Date	Particulars	Amount
	To Balance C/F	$40,000		By Balance B/F	$30,000
				By Depreciation Expense A/C	$10,000
	Total	$40,000		Total	$40,000
Accounts Payable A/C
Date	Particulars	Amount	Date	Particulars	Amount
	To Balance C/F	$31,000		By Balance B/F	$31,000
	Total	$31,000		Total	$31,000
Salaries Payable A/C
Date	Particulars	Amount	Date	Particulars	Amount
	To Balance C/F	$1,500		By Salaries A/C	$1,500
	Total	$1,500		Total	$1,500
Notes Payable A/C
Date	Particulars	Amount	Date	Particulars	Amount
	To Balance C/F	$50,000		By Balance B/F	$50,000
	Total	$50,000		Total	$50,000
Interest Payable A/C
Date	Particulars	Amount	Date	Particulars	Amount
	To Balance C/F	$1,500		By Interest Payable A/C	$1,500
	Total	$1,500		Total	$1,500
Deferred Sales Revenue A/C
Date	Particulars	Amount	Date	Particulars	Amount
	To Balance C/F	$2,000		By Balance B/F	$2,000
	Total	$2,000		Total	$2,000
Common Stock A/C
Date	Particulars	Amount	Date	Particulars	Amount
	To Balance C/F	$60,000		By Balance B/F	$60,000
	Total	$60,000		Total	$60,000
Retained Earnings A/C
Date	Particulars	Amount	Date	Particulars	Amount
	To Balance C/F	$28,500		By Balance B/F	$28,500
	Total	$28,500		Total	$28,500
Dividends A/C
Date	Particulars	Amount	Date	Particulars	Amount
	To Balance B/F	$4,000		By Balance C/F	$4,000
	Total	$4,000		Total	$4,000
Sales Revenue A/C
Date	Particulars	Amount	Date	Particulars	Amount
	To Balance C/F	$146,000		By Balance B/F	$146,000
	Total	$146,000		Total	$146,000
Interest revenue A/C
Date	Particulars	Amount	Date	Particulars	Amount
	To Balance C/F	$1,333		By Interest Receivables A/C	$1,333
	Total	$1,333		Total	$1,333
Cost of Goods Sold A/C
Date	Particulars	Amount	Date	Particulars	Amount
	To Balance B/F	$70,000		By Balance C/F	$70,000
	Total	$70,000		Total	$70,000
Salaries Expense A/C
Date	Particulars	Amount	Date	Particulars	Amount
	To Balance B/F	$18,900		By Balance C/F	$20,400
	To Salaries payable A/C	$1,500
	Totall	$20,400		Total	$20,400
Rent Expense A/C
Date	Particulars	Amount	Date	Particulars	Amount
	To Balance B/F	$11,000		By Balance C/F	$12,000
	To Prepaid rent A/C	$1,000
	Total	$12,000		Total	$12,000
Depreciation Expense A/C
Date	Particulars	Amount	Date	Particulars	Amount
	To Accumulated Depreciation A/c	$10,000		By Balance C/F	$10,000
	Total	$10,000		Total	$10,000
Interest Expense A/C
Date	Particulars	Amount	Date	Particulars	Amount
	To Interest Payable A/C	$1,500		By Balance C/F	$1,500
	Total	$1,500		Total	$1,500
Supplies Expense A/C
Date	Particulars	Amount	Date	Particulars	Amount
	To Balance B/F	$1,100		By Balance C/F	$1,800
	To Supplies A/C	$700
	Total	$1,800		Total	$1,800
Insurance Expense A/C
Date	Particulars	Amount	Date	Particulars	Amount
	To Prepaid Insurance A/C	$4,500		By Balance C/F	$4,500
	Total	$4,500		Total	$4,500
Adverting Expense A/C
Date	Particulars	Amount	Date	Particulars	Amount
	To balance B/F	$3,000		By Balance C/F	$3,000
	Total	$3,000		Total	$3,000