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. Credits Debits 33,800 41,800 2,400 61,800 21,800 1,800 7,800 87,200 32,700 32,800 © 51,800 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 2,900 72,600 33,000 5,800 155,000 79,000 19,800 11,900 @ 2,000 0 3,900 380,800 380,800 Information necessary to prepare the year-end adjusting entries appears below.

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

1. Depreciation on the office equipment for the year is $10,900.
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 $1,200.
3. On October 1, 2021, Pastina borrowed $51,800 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 $21,800 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 $7,800 for a one-year fire insurance policy. The entire $7,800 was debited to prepaid insurance.
6. $740 of supplies remained on hand at December 31, 2021.
7. A customer paid Pastina $2,900 in December for 1,200 pounds of spaghetti to be delivered in January 2022. Pastina credited deferred sales revenue.
8. On December 1, 2021, $1,800 rent was paid to the owner of the building. The payment represented rent for December 2021 and January 2022 at $900 per month. The entire amount was debited to prepaid rent.

Post the unadjusted balances and adjusting entires into the appropriate t-accounts.

Prepare an adjusted trial balance.

Answer 1

Journal in the Books of Pastina Company
Adjusting entries
Date	Particulars	Debit	Credit
31-12-21	Depreciation A/c	$10,900
	To Accumulated Depreciation A/c		$10,900
	(Being depreciation for Office Equipment Charged)
31-12-21	Salaries Expense A/c	$1,200
	To Salary Payable A/c		$1,200
	(Being Accrued Salary from 15th Dec. 2021)
31-12-21	Supplies Expenses	$1,660
	To Supplies		$1,660
	(Supply expenses adjusted with the closing balance)
31-12-21	Interest Expense	$1,554
	To Interest payable		$1,554
	(Interest payable from 1st Oct-2021,)
	((51,800 X 12/100)3/12)
31-12-21	Interest Receivable A/c	$1,543
	To Interest Revenue A/c		$1,543
	(Interest Receivable from supplier accounted)
31-12-21	Insurance Expense	$5,850
	To Prepaid Insurance		$5,850
	(Prepaid Insurance adjusted for the period)
31-12-21	Deferred Sales Revenue A/c	$2,900
	To Sales Revenue A/c		$2,900
	(Sales made but not delivered is transferred to Sales)
31-12-21	Rent A/c	$900
	To Prepaid Rent A/c		$900
	(Being December 2021 Rent Transferred to Rent A/c)

Pastina Company Adjusted Trial balance as of December 31, 2021
Account Title	Debit Balances	Credit Balances
Cash	$33,800
Accounts receivable	$41,800
Supplies	$740
Inventory	$61,800
Notes receivable	$21,800
Interest receivable	$1,543
Prepaid rent	$900
Prepaid insurance	$1,950
Office equipment	$87,200
Accumulated depreciation		$43,600
Accounts payable		$32,800
Salaries payable		$1,200
Notes payable		$51,800
Interest payable		$1,554
Common stock		$72,600
Retained earnings		$33,000
Dividends	$5,800
Sales revenue		$1,57,900
Interest revenue		$1,543
Cost of goods sold	$79,000
Salaries expense	$21,000
Rent expense	$12,800
Depreciation expense	$10,900
Interest expense	$1,554
Supplies expense	$3,660
Insurance expense	$5,850
Advertising expense	$3,900
Total	$3,95,997	$3,95,997