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 31,600 41,000 2,080 61,000 21,000 2,400 6,500 B4,000 31,500 32,000 51,000 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 2,500 66,500 31,000 5,000 151,000 @ 75,000 19,400 11,500 1,600 0 3,500 365,500 365,500 Information necessary to prepare the year-end adjusting entries appears below 1. Depreciation on the office equipment for the year is $10,500 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 $1,400, < Prev 17 of 22 Next >

Answer 1

Transaction 5 - On April 1, 2021, two year insurance policy amount paid $6,500.

So, on Dec 31, 2021, insurance expenses would be recorded for 9 months (April to Dec 2021).

Transaction	General Journal	Debit	Credit
5	Insurance Expense ($6,500*9 / 24)	$2,438
	Prepaid Insurance		$2,438
	(To record insurance expense for the year)

Transaction 7 - No Entry is needed

Since the service to be delivered or performed in January 2022, the deferred Sales Revenue is Debited and Sales Revenue  account will be credited.

Hence, No adjustment entry is required on Dec 31