Question

1. Prepare general journal entries to record each transaction. Omit explanations.

Pastina Company manufactures and sells various types of pasta to grocery chains as private label brands. The company's fiscal year-end is December 31. The December 31, 2020 trial balance is as follows: Credits PASTINA COMPANY Trial Balance December 31, 2020 Account Title Debits Cash $ 24,550 Accounts receivable 22,000 Supplies 1,400 Inventory 68,000 Prepaid rent 1,250 Office equipment 92,000 Accumulated depr.-office equipment Accounts payable Salaries payable Common stock Retained earnings Totals $209,200 34,500 14,000 1,500 61,000 98,200 $209,200

Answer 1

Pastina Company Journal Enteries Date Particulars 1.1.2021 Cash a/c Dr. To Common Stock (Common Stock issued) Debit in $ Credit in $ 20000 20000 Dr. 1250 31.1.2021 Rent Expense a/c To Prepaid Rent (Rent expensed) 1250 80000 15.2.2021 Inventory a/c Dr. To Accounts Payable (Inventory on account) 80000 1.3.2021 24000 Note Receivable a/c Dr. To Cash (Cash lent to supplier) 24000 1.4.2021 9000 Prepaid Insurance a/c Dr. To Cash (one year insurance paid) 9000 60000 20.4.2021 Accounts Payable a/c Dr. To Cash (Cash paid to creditors) 60000 1.7.2021 4500 Advertisement Expense a/c Dr. To Cash (Expense paid) 4500 8.7.2021 Dr. 4400 Supplies a/c To Cash (Supplies purchased) 4400

Date Particulars 1.10.2021 Cash a/c Dr. To Note Payable (Borrowed from Bank) Debit in $ Credit in $ 60000 60000 Dr. 12500 Rent Expense a/c To Cash (Rent paid) 12500 Dr. Dr. 1250 1250 1.12.2021 Prepaid Rent a/c Rent Expense a/c To Cash (Rent paid) 2500 3500 1.12.2021 Cash a/c Dr. To Unearned Revenue (Advance from client) 3500 Dr. 7000 15.12.2021 Cash Dividends a/c To Cash (Dividends paid) 7000 Dr. Dr. 20400 1500 2.12.2021 Salaries Expense a/c Salaries Payable a/c To Cash (Salary paid) 21900 Dr. 161000 Jan - Dec Accounts Receivable a/c To Sales (Sales on account) 161000 85000 Cost of goods sold a/c Dr. To Inventory (To record cost of goods sold) 85000 Dr. 140000 Jan - Dec Cash a/c To Accounts Receivable (Cash from debtors) 140000 Jan-Dec Dr. 8000 Utility Expense a/c To Cash (Expense paid) 8000

Adjusting Enteries Date Particulars 31.12.2021 Depreciation Expense a/c Dr. To Accum. Depre-Off. Equip. (To record depreciation) Debit in $ Credit in $ 11500 11500 4880 31.12.2021 Supplies Expense a/c Dr. To Supplies (Supplies expensed) 1400 + 4400 - 920 4880 1550 31.12.2021 Salaries Expense a/c Dr. To Salaries Payable (Salary accrued) 1550 1600 31.12.2021 Interest Receivable a/c Dr. To Interest Revenue (Interest accrued) 24000 x 0.08 x 10/12 1600 6750 31.12.2021 Insurance Expense a/c Dr. To Prepaid Insurance (Insurance expensed)9000 x 9/12 6750 1800 31.12.2021 Interest Expense a/c To Interest Payable (Interest accrued) 60000 x 12% x 3/12 1800

Worksheet For the period ending 31.12.2021 Particulars Cash Note Receivable Interest Receivable Accounts Receivable Supplies Inventory Prepaid Insurance Prepaid Rent Office Equipment Accum. Depre-Off. Equip. Accounts Payable Salaries Payable Interest Payable Unearned Revenue Note Payable Common Stock Retained Earnings Cash Dividends Sales Cost of goods sold Rent Expense Advertisement Expense Salaries Expense Utility Expense Depreciation Expense Supplies Expense Insurance Expense Interest Expense Interest Revenue Totals Unadjusted Adjustments Adjusted Debit in $ Credit in $ Debit in $ Credit in $ Debit in $ Credit in $ 94250 94250 24000 24000 1600 1600 43000 43000 5800 4880 920 63000 63000 9000 6750 2250 1250 1250 92000 92000 34500 11500 46000 34000 34000 0 1550 1550 1800 1800 3500 3500 60000 60000 81000 81000 98200 98200 7000 7000 161000 161000 85000 85000 15000 15000 4500 4500 20400 1550 21950 8000 8000 11500 11500 4880 4880 6750 6750 1800 1800 1600 1600 472200 472200 28080 28080 488650 488650 161000 -85000 76000 Statement of Income For the period ending 31.12.2021 Sales Cost of goods sold Gross Profit Rent Expense Advertisement Expense Salaries Expense Utility Expense Depreciation Expense Supplies Expense Insurance Expense Operating Income Non Operating items: Interest Expense Interest Revenue Net Income 15000 4500 21950 8000 11500 4880 6750 72580 3420 -1800 1600 -200 3220 Statement of Retained Earnings For the period ending 31.12.2021 Beginning Balance Add:Net Income 98200 3220 101420 -7000 94420 Less:Cash Dividends

Balance sheet As at 31.12.2021 Assets Current Assets Cash Note Receivable Interest Receivable Accounts Receivable Supplies Inventory Prepaid Insurance Prepaid Rent Amounts in $ Amounts in $ Liabilities Amounts in $ Amounts in $ Current Liabilities 94250 Accounts Payable 34000 24000 Salaries Payable 1550 1600 Interest Payable 1800 43000 Unearned Revenue 3500 40850 920 63000 Non Current Liabilities 2250 Note Payable 60000 1250 230270 Non Current Assets Office Equipment Accum. Depre-Off. Equip. Tota Assets 92000 -46000 Shareholders Equity Common Stock 46000 Retained Earnings 276270 Total Liabilities & Equity 81000 94420 175420 276270