Question

Problem 2-4 Accounting cycle; adjusting entries through post-closing trial balance [LO2-3, 2-5, 2-6, 2-7] The following information applies to the questions displayed below.] 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 Cash Accounts receivable Supplies Inventory Note receivable Interest receivable Prepaid rent Prepaid insurance Office equipment Accumulated depreciation-office equipment Accounts payable Salaries and wages payable Note payable Interest payable Deferred revenue Common stock Retained earnings Sales revenue Interest revenue Cost of goods sold Salaries and wages expense Rent expense Depreciation expense Interest expense Supplies expense Insurance expense Advertising expense Totals Debits Credits 40,600 44,000 1,150 64,000 17,700 1,300 66,000 24,750 23,000 47,700 60,000 16,500 168,000 75,600 15,900 7,150 650 3,600 2,300 339,950 339,950 Information necessary to prepare the year-end adjusting entries appears below 1 Depreciation on the office equipment for the year is $8,250. 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 3. On October 1, 2018, Pastina borrowed $47,700 from a local bank and signed a note. The note requires interest to be 4. On March 1, 2018, the company lent a supplier $17,700 and a note was signed requiring principal and interest at 8% to 5. On April 1, 2018, the company paid an insurance company $3,600 for a two-year fire insurance policy. The entire 6. $590 of supplies remained on hand at December 31, 2018 month. Salaries and wages earned from December 16 through December 31, 2018, were $950 paid annually on September 30 at 12%. The principal is due in 10 years be paid on February 28, 2019 $3,600 was debited to insurance expense 7. A customer paid Pastina $1,140 in December for 950 pounds of spaghetti to be delivered in January 2019. Pastina credited sales revenue 8. On December 1, 2018, $1,300 rent was paid to the owner of the building. The payment represented rent for December 2018 and January 2019, at $650 per month.

Answer 1

Adjusting entries are as prepared below:

Date	Particulars	L.F	Amount ($)	Amount ($)
2018
Dec-31	Depreciation Expense		8,250
	Accumulated depreciation			8,250
Dec-31	Salaries and Wages Expense		950
	Salaries and Wages Payable			950
Dec-31	Interest Expense (47,700*12%*3/12)		1,431
	Interest Payable			1,431
Dec-31	Interest Receivable		1,180
	Interest Income (17,700*8%*10/12)			1,180
Dec-31	Prepaid Insurance		2,250
	Insurance Expense (3,600*15/24)			2,250
Dec-31	Supplies Expense		560
	Supplies			560
Dec-31	Sales Revenue		1,140
	Deferred Revenue			1,140
Dec-31	Rent Expense		650
	Prepaid Rent			650