Question

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.

   

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, 2021, were $1,600.

3. On October 1, 2021, 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, 2021, 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, 2021, 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, 2021.

7. A customer paid Pastina $3,600 in December for 1,550 pounds of spaghetti to be delivered in January 2022. Pastina credited deferred sales revenue.

8. On December 1, 2021, $2,600 rent was paid to the owner of the building. The payment represented rent for December 2021 and January 2022 at $1,300 per month. The entire amount was debited to prepaid rent.

rev: 09_14_2019_QC_CS-180268, 10_11_2019_QC_CS-184133