Question

Problem 2-4 (Algo) Accounting cycle; adjusting entries through post-closing trial balance [LO2-4, 2-6, 2-7, 2-8]

[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.

   

Account Title	Debits		Credits
Cash	34,100
Accounts receivable	42,000
Supplies	2,500
Inventory	62,000
Notes receivable	22,000
Interest receivable	0
Prepaid rent	1,900
Prepaid insurance	8,000
Office equipment	88,000
Accumulated depreciation			33,000
Accounts payable			33,000
Salaries payable			0
Notes payable			52,000
Interest payable			0
Deferred sales revenue			3,000
Common stock			74,000
Retained earnings			33,500
Dividends	6,000
Sales revenue			156,000
Interest revenue			0
Cost of goods sold	80,000
Salaries expense	19,900
Rent expense	12,000
Depreciation expense	0
Interest expense	0
Supplies expense	2,100
Insurance expense	0
Advertising expense	4,000
Totals	384,500		384,500

Information necessary to prepare the year-end adjusting entries appears below.

1. Depreciation on the office equipment for the year is $11,000.
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 $1,250.
3. On October 1, 2021, Pastina borrowed $52,000 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 $22,000 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 $8,000 for a one-year fire insurance policy. The entire $8,000 was debited to prepaid insurance.
6. $770 of supplies remained on hand at December 31, 2021.
7. A customer paid Pastina $3,000 in December for 1,250 pounds of spaghetti to be delivered in January 2022. Pastina credited deferred sales revenue.
8. On December 1, 2021, $1,900 rent was paid to the owner of the building. The payment represented rent for December 2021 and January 2022 at $950 per month. The entire amount was debited to prepaid rent.

Required:

1. & 2. Post the unadjusted balances and adjusting entires into the appropriate t-accounts. (Enter the number of the adjusting entry in the column next to the amount. Do not round intermediate calculations. Round your final answers to nearest whole dollar.)

Answer 1

T- Accounts e) . Depreciation Expense account $11000 $ 14000 Accumulated Depreciation Balance $ 33000 $ il 1000 $ 44000 Salaries & wagesi B Balance obatan er ( 19900 $ 141250 ! $ 21150 Salaries & wages Payable Dr $ 1250 $1250

Interest Expense Dr Co 01560 52000 X12000 x 3412 - 1560 $1560 Interest Payable | or Cr $ 1560 0991 $ Interest receivable eq Cr << $1466.67 $1466-67 22000 x86]. X10 =1466.67 12 5 Interest Revenue Dr Cr 1466.67 1466.67 Frosandunhan all

Insurance Expense Dr Balance ar $ 8000 5 5000 $3000 Prepaid Incurance Dr. 5 5000 € 5000 Supplies Expense Dr Balance $ 2100 (2500-770) $ 2730 3830 Supplies 6 Balance $ 2500 $ 1730 1 770

Sales Revenue Dr Balance 156000 그 7 1$ 3000 153000 Defferred Revenue Cr 7 2000 $3000 Rent Expense Balance 0 1200'O 8 C t $ 950 12950 Prepaid peat DR Balance $ 1900 8 950 $950