Question

Required Information [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 reporting year-end is December 31. The unadjusted trial balance as of December 31, 2021. appears below. Credits Debits 35,500 43,000 3.ee 63,00 23,00 2,500 9,000 92,000 34,500 34,90 53, eee Account Title 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 3.599 81,000 36,000 7,000 161,000 85,690 20,400 12.50 2,600 403,000 403,000 Information necessary to prepare the year-end adjusting entries appears below. 1. Depreciation on the office equipment for the year is $11,500. 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 $1,550. 3. On October 1, 2021. Pastina borrowed $53.000 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 $23.000 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 $9.000 for a one-year fire insurance policy. The entire $9.000 was debited to prepaid insurance. 6. $920 of supplies remained on hand at December 31, 2021. 7. A customer paid Pastina $3.500 in December for 1,500 pounds of spaghetti to be delivered in January 2022. Pastina credited deferred sales revenue. 8. On December 1, 2021. $2.500 rent was paid to the owner of the building. The payment represented rent for December 2021 and January 2022 at $1.250 per month. The entire amount was debited to prepaid rent. 3. Prepare closing entries. (If no entry Is requlred for a particular transaction, select "No journal entry required" In the first account fleld. Do not round Intermediate calculations. Round your final answers to nearest whole dollar.)

Answer 1

Closing Entries:

Date	Account title and Explanation	Debit	Credit
Dec 31,2021	Service revenue	$161,000
	Interest revenue	$1,533
	Income summary		$162,533
	[To close revenue accounts]
Dec 31,2021	Income Summary	$146,720
	Cost of goods sold		$85,000
	Salaries expense		$21,950
	Rent expense		$13,750
	Depreciation expense		$11,500
	Interest expense		$1,590
	Supplies expense		$1,680
	Insurance expense		$6,750
	Advertising expense		$4,500
	[To close expenses accounts]
Dec 31,2021	Income summary [162,533-146,720]	$15,813
	Retained earnings		$15,813
	[To close income summary account]
Dec 31,2021	Retained earnings	$7,000
	Dividends		$7,000
	[To close dividends account]

Calculations:

Revenues and Expenses after adjustments:

Service revenue		$161,000
Interest revenue [23,000 x 8% x 10/12]		$1,533
Cost of goods sold	$85,000
Salaries expense [20,400+1,550]	$21,950
Rent expense [12,500+1,250]	$13,750
Depreciation expense	$11,500
Interest expense [53,000 x 12% x 3/12]	$1,590
Supplies expense [2,600-920]	$1,680
Insurance expense [9,000 x 9/12]	$6,750
Advertising expense	$4,500