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		33,800
Accounts receivable		42,000
Supplies		2,500
Inventory		62,000
Notes receivable		22,000
Interest receivable		0
Prepaid rent		2,200
Prepaid insurance		7,000
Office equipment		88,000
Accumulated depreciation					33,000
Accounts payable					33,000
Salaries payable					0
Notes payable					52,000
Interest payable					0
Deferred sales revenue					3,000
Common stock					73,000
Retained earnings					33,500
Dividends		6,000
Sales revenue					156,000
Interest revenue					0
Cost of goods sold		80,000
Salaries expense		19,900
Rent expense		12,000
Depreciation expense		0
Interest expense		0
Supplies expense		2,100
Insurance expense		0
Advertising expense		4,000
Totals		383,500			383,500

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 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 $1,600.
3. On October 1, 2021, Pastina borrowed $52,000 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 $22,000 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 $7,000 for a two-year fire insurance policy. The entire $7,000 was debited to prepaid insurance.
6. $700 of supplies remained on hand at December 31, 2021.
7. A customer paid Pastina $3,000 in December for 1,560 pounds of spaghetti to be delivered in January 2022. Pastina credited deferred sales revenue.
8. On December 1, 2021, $2,200 rent was paid to the owner of the building. The payment represented rent for December 2021 and January 2022, at $1,100 per month. The entire amount was debited to prepaid rent.

Required:
Prepare the necessary December 31, 2021, 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. Round your final answers to nearest whole dollar amount.)

Answer 1

Preparation of Adjusting Entries for the Year Ended December 31, 2021: Journal Entries Date Account Title and Explaination Post. Ref. Debit $ Credit $ $ 11,000.00 2021 Dec.31 Depreciation Expense Accumulated Depreciation (To record adjusting entry for Depreciation Expense) $ 11,000.00 Dec.31 $ 1,600.00 $ 1,600.00 Salaries Expense Salaries Payable (To record adjusting entry for accrued Salaries expenses) Dec.31 02 1,560.00 Interest Expense ($52000 x 12% x 3 months/12 months) Interest Payable (To record adjusting entry for accrued interest expense) $ 1,560.00

Dec.31 $ 1,466.67 Interest Receivable ($22000 x 8% x 10 months/12months) Interest Revenue (To record adjusting entry for earned interest on Notes receivable) $ 1,466.67 S 2,916.67 S 2,916.67 Dec.31 Insurance Expense ($7000/24months x 10months) Prepaid Insurance (To record adjusting entry for expired portion of prepaid insurance) Dec.31 Supplies Expense ($2500 - $700) Supplies (To record adjusting entry for Consumption of Supplies) S 1,800.00 $ 1,800.00 Dec.31 No Journal Entry Required Dec.31 S 1,100.00 $ 1,100.00 Rent Expense Prepaid Rent (To record adjusting entry for Expired portion of Prepaid Rent)