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. Credits Debits 46,350 56,000 1,750 75,000 27,600 0 2,500 0 90,000 33,750 35,000 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 69,600 0 0 60,000 22,000 223,000 0 100, 350 19,500 13,750 0 0 1,250 5,800 3,500 443,350 443,350

Answer 1

221,200 100,350 120,850 Pastina Company Income Statement For the Year Ended December 31, 2018 Sales Revenue Cost of goods sold Gross Profit Operating Expenses Salaries expense Rent expense Depreciation expense Supplies expense Insurance expense Advertising expense Total Operating Expenses Operating Income Other Income (Expense) Interest expense Interest Revenue Total Other Income (Expense) Net Income 21,050 15,000 11,250 2,080 2,175 3,500 55,055 65,795 (2,088) 1,840 (248) 65,547

Pastina Company Statement of Stockholders equity For the Year Ended December 31, 2018 Calculation Common Stock Retained Earnings Total Stockholders equity Retained Earnings Balance at Jan 1, 2018 60,000 25,600 85,600 22000+3600 Net Income 65,547 65,547 Dividends (3,600) (3,600) Balance at Dec 31, 2018 60,000 87,547 147,547

Pastina Company Balance Sheet As of December 31, 2018 Assets Current Assets Cash Accounts Receivable Supplies Inventory Notes Receivable Interest Receivable Prepaid Rent Prepaid Insurance Total Current Assets 46,350 56,000 920 75,000 27,600 1,840 1,250 3,625 212,585 Fixed Assets Office Equipment 90,000 Accumulated Depreciation - Office Equi (45,000) Net Fixed Assets Total Assets 45,000 257,585 Liabilities & Stockholders Equity Current Liabilities Accounts Payable Salaries Payable Interest Payable Deferred sales revenue Total Current Liabilities 35,000 1,550 2,088 1,800 40,438 Non-Current Liabilities Notes Payable Total Liabilities 69,600 110,038 Stockholders Equity Common Stock Retained earnings Total Stockholders Equity Total Liabilities & Stockholders Equity 60,000 87,547 147,547 257,585

Credit Calculation Closing entries No. Account 1 Sales Revenue Interest Revenue Income Summary Debit 221,200 1,840 223,040 157,493 2 Income Summary Cost of goods sold Salaries and Wages expense Rent expense Depreciation expense Interest expense Supplies expense Insurance expense Advertising expense 100,350 21,050 15,000 11,250 2,088 2,080 2,175 3,500 65,547 223040-157493 3 Income Summary Retained Earnings 65,547

Pastina Company Account Names Cash Accounts Receivable Supplies Inventory Notes Receivable Interest Receivable Prepaid Rent Prepaid Insurance Office Equipment Accumulated Depreciation - Office Equipment Accounts Payable Salaries and Wages Payable Notes Payable Interest Payable Deferred revenue Common Stock Retained Earnings Totals Post Closing TB Debit Credit 46,350 56,000 920 75,000 27,600 1,840 1,250 3,625 90,000 45,000 35,000 1,550 69,600 2,088 1,800 60,000 87,547 302,585 302,585

Adjusting Entries and T accounts

Pastina Company Journal entries No. Account 1 Depreciation expense Accumulated Depreciation - Office Equipment Credit Calculation Debit 11,250 11,250 1,550 2 Salaries and Wages expense Salaries and Wages Payable 1,550 2,088 69600*12%*3/12 3 Interest expense Interest Payable 2,088 1,840 27600*8%*10/12 4 Interest Receivable Interest Revenue 1,840 3,625 5800/24* (24-9) 5 Prepaid Insurance Insurance expense 3,625 830 1750-920 6 Supplies expense Supplies 830 1,800 7 Sales Revenue Deferred revenue 1,800 1,250 2500/2 8 Rent expense Prepaid Rent 1,250

Pastina Company T Accounts Date Debit Date Cash Unadj Bal $ 46,350 Credit Credit Date Debit Date Credit Accounts Receivable Unadj Bal $ 56,000 Date Debit Date Credit Prepaid Rent Unadj Bal $ 2,500 8 $ 1,250 Date Debit Date Prepaid Insurance Unadj Bal $ 5 $ 3,625 Adj Bal Adj Bal $ 46,350 Supplies $ 1,750 Adj Bal $ 56,000 Inventory Unadj Bal $ 75,000 Adj Bal $ 1,250 Notes Receivable Unadj Bal $ 27,600 $ 3,625 Office Equipment Unadj Bal $ 90,000 Unadj Bal 6 $ 830 Adj Bal $ 920 Adj Bal Adj Bal $ 75,000 ccumulated Depreciation - Office Equipme Unadj Bal $ 33,750 1 $ 11,250 Interest Receivable $ $ 1,840 $ 27,600 Accounts Payable Unadj Bal $ 35,000 Adj Bal $ 90,000 Salaries and Wages Payable Unadj Bal $ 2 $ 1,550 Unadj Bal 4 Adj Bal $ 1,840 Notes Payable Unadj Bal Adj Bal $ 45,000 Interest Payable Unadj Bal $ 3 $ 2,088 Adj Bal $ 35,000 Deferred revenue Unadj Bal $ 7 $ 1,800 Adj Bal $ 1,550 Common Stock Unadj Bal $ 60,000 $ 69,600 Adj Bal Retained Earnings Unadj Bal $ 69,600 Adj Bal $ 2,088 Dividends declared & paid $ 22,000 Unadj Bal $ Adj Bal $ 1,800 Sales Revenue Unadj Bal $223,000 $ 1,800 Adj Bal $ 60,000 Interest Revenue Unadj Bal $ 4 $ 1,840 7 $ 221,200 Adj Bal Cost of goods sold $ 100,350 $ 22,000 Adj Bal $ Salaries and Wages expense Unadj Bal $ 19,500 2 $1,550 Adj Bal Rent expense Unadj Bal $ 13,750 8 $ 1,250 Adj Bal $ 1,840 Depreciation expense Unadj Bal $ 1 $ 11,250 Unadj Bal Adj Bal $ 100,350 Interest expense Unadj Bal $ 3 $ 2,088 Adj Bal $ 21,050 Supplies expense Unadj Bal $ 1,250 6 $ 830 Adj Bal $ 15,000 Insurance expense Unadj Bal $ 5,800 5 $ 3,625 Adj Bal $ 11,250 Advertising expense Unadj Bal $ 3,500 - Adj Bal $ 2,088 Adj Bal $ 2,080 Adj Bal $ 2,175 Adj Bal $ 3,500