Question

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 1,158 64,000 17,700 1,300 66,000 24,750 23,000 47,700 6e,000 16,500 168,008 75,680 15,900 7,15e 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 lanuary 2019 at 650 ner month

Answer 1

Solution:

Adjusting Journal Entries - Pastina Company
S.No	Particulars	Debit	Credit
1	Depreciation Expense Dr	$8,250.00
	To Accumulated Depreciation -Office Equipment		$8,250.00
	(To record Depreciation expense on office equipment)
2	Salaries and Wages Expense Dr	$950.00
	To Salaries and Wages Payable		$950.00
	(To record salaries payable for 15 days of December 2018)
3	Interest Expense Dr [$47700*12%*3/12]	$1,431.00
	To Interest Payable		$1,431.00
	(To record interest payable on Note for 3 months Oct to Dec)
4	Interest receivable Dr [$17700*8%*10/12]	$1,180.00
	To Interest Revenue		$1,180.00
	(To record Interest Receivable for 10 months)
5	Prepaid Insurance Dr [$3600*15/24]	$2,250.00
	To Insurance Expense		$2,250.00
	(To record prepaid Insurance for 15 months out of 24 months)
6	Supplies expense Dr [$1150-$590]	$560.00
	To Supplies		$560.00
	(To record supplies expense]
7	Sales Revenue Dr	$1,140.00
	To Unearned Sales Revenue		$1,140.00
	(To record unearned sales revenue)
8	Rent Expense Dr	$650.00
	To Prepaid Rent		$650.00
	(To record rent expense for December)