Question

Rezzi 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, 2018, appears below.

   

Account Title	Debits		Credits
Cash	35,800
Accounts receivable	43,200
Supplies	3,100
Inventory	63,200
Notes receivable	23,200
Interest receivable	0
Prepaid rent	2,600
Prepaid insurance	9,200
Office equipment	92,800
Accumulated depreciation			34,800
Accounts payable			34,200
Salaries payable			0
Notes payable			53,200
Interest payable			0
Deferred sales revenue			3,600
Common stock			82,400
Retained earnings			36,500
Dividends	7,200
Sales revenue			162,000
Interest revenue			0
Cost of goods sold	86,000
Salaries expense	20,500
Rent expense	12,600
Depreciation expense	0
Interest expense	0
Supplies expense	2,700
Insurance expense	0
Advertising expense	4,600
Totals	406,700		406,700

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

1. Depreciation on the office equipment for the year is $11,600.
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, 2018, were $1,600.
3. On October 1, 2019, Pastina borrowed $53,200 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 $23,200 and a note was signed requiring principal and interest at 8% to be paid on February 28, 2022.
5. On April 1, 2018, the company paid an insurance company $9,200 for a one-year fire insurance policy. The entire $9,200 was debited to prepaid insurance.
6. $950 of supplies remained on hand at December 31, 2018.
7. A customer paid Pastina $3,600 in December for 1,550 pounds of spaghetti to be delivered in January 2019. Pastina credited deferred sales revenue.
8. On December 1, 2018, $2,600 rent was paid to the owner of the building. The payment represented rent for December 2018 and January 2019 at $1,300 per month. The entire amount was debited to prepaid rent.A

Arrange unadjusted balances and adjusting entire into T-Charts

Answer 1

Pastina Company Journal entries No. Account 1 Depreciation expense Accumulated Depreciation Credit Calculation Debit $ 11,600 $ 11,600 $ 1,600 2 Salaries expense Salaries Payable $ 1,600 $ 1,596 =53,200*12%*3/12 3 Interest expense Interest Payable $ 1,596 $ 1,547 =23,200*8%*10/12 4 Interest Receivable Interest Revenue $ 1,547 $ 6,900 =9,200/12*9 5 Insurance expense Prepaid Insurance $ 6,900 $ 2,150 =3,100-950 6 Supplies expense Supplies $ 2,150 7 No entry $ 1,300 8 Rent expense Prepaid Rent $ 1,300

Pastina Company T Accounts Date Debit Date Cash Unadj Bal $ 35,800 Credit Credit Credit Date Debit Date Credit Accounts Receivable Unadj Bal $43,200 Date Debit Date Prepaid Rent Unadj Bal $ 2,600 Date Debit Date Prepaid Insurance Unadj Bal $ 9,200 5 8 $ 1,300 $ 6,900 Adj Bal $ 35,800 Supplies 3,100 Adj Bal $43,200 Inventory Unadj Bal $63,200 Adj Bal $ 1,300 Notes Receivable Unadj Bal $ 23,200 Adj Bal $ 2,300 Office Equipment Unadj Bal $ 92,800 Unadj Bal $ 6 $ 2,150 Adj Bal Adj Bal Adj Bal $ 950 Interest Receivable $ $ 1,547 Adj Bal $63,200 Accumulated Depreciation Unadj Bal $ 34,800 1 $ 11,600 $23,200 Accounts Payable Unadj Bal $ 34,200 $92,800 Salaries Payable Unadj Bal $ - 2 $ 1,600 Unadj Bal 4 Adj Bal $ 1,547 Notes Payable Unadj Bal Adj Bal $ 46,400 Interest Payable Unadj Bal $ 3 $ 1,596 Adj Bal $ 34,200 Deferred sales revenue Unadj Bal $ 3,600 7 $ - Adj Bal $ 1,600 Common Stock Unadj Bal $82,400 $ 53,200 $ 53,200 $ 1,596 Adj Bal Retained Earnings Unadj Bal Adj Bal Dividends Unadj Bal $ 7,200 Adj Bal $ 3,600 Sales Revenue Unadj Bal $162,000 7 $ - Adj Bal $ 82,400 Interest Revenue Unadj Bal $ . 4 $ 1,547 $ 36,500 $ $162,000 Adj Bal Cost of goods sold $ 86,000 36,500 Adj Bal $ 7,200 Salaries expense Unadj Bal $ 20,500 2 $ 1,600 Adj Bal Rent expense Unadj Bal $ 12,600 8 $ 1,300 Adj Bal $ 1,547 Depreciation expense Unadj Bal $ - 1 $ 11,600 Unadj Bal Adj Bal $ 86,000 Interest expense Adj Bal $ 22,100 Supplies expense Unadj Bal $ 2,700 6 $ 2,150 Adj Bal $ 13,900 Insurance expense Unadj Bal $ - 5 $ 6,900 Adj Bal $11,600 Advertising expense Unadj Bal $ 4,600 Unadj Bal 3 $ $ 1,596 Adj Bal $ 1,596 Adj Bal $ 4,850 Adj Bal $ 6,900 Adj Bal $4,600

Adjustments Debit Credit Unadjusted TB Debit Credit 35,800 43,200 3,100 63,200 23,200 2,150 1,547 2,600 1,300 6,900 9,200 92,800 11,600 Post Closing TB Debit Credit 35,800 43,200 950 63,200 23,200 1,547 1,300 2,300 92,800 46,400 34,200 1,600 53,200 1,596 3,600 82,400 41,301 34,800 34,200 1,600 Pastina Company Account Names Cash Accounts Receivable Supplies Inventory Notes Receivable Interest Receivable Prepaid Rent Prepaid Insurance Office Equipment Accumulated Depreciation Accounts Payable Salaries Payable Notes Payable Interest Payable Deferred sales revenue Common Stock Retained Earnings Dividends Sales Revenue Interest Revenue Cost of goods sold Salaries expense Rent expense Depreciation expense Interest expense Supplies expense Insurance expense Advertising expense Totals 53,200 Adjusted TB Debit Credit 35,800 43,200 950 63,200 23,200 1,547 1,300 2,300 92,800 46,400 34,200 1,600 53,200 1,596 3,600 82,400 36,500 7,200 162,000 1,547 86,000 22,100 13,900 11,600 1,596 4,850 6,900 4,600 423,043 423,043 1,596 3,600 82,400 36,500 7,200 162,000 1,547 86,000 20,500 12,600 1,600 1,300 11,600 1,596 2,150 6,900 2,700 4,600 406,700 406,700 26,693 26,693 264,297 264,297