Question

Required information [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 fiscal year-end is December 31. The unadjusted trial balance as of December 31, 2018, appears below. Account Title Debits Credits Cash 44,950 Accounts receivable 60,000 Supplies 1,950 79,000 31,200 Inventory Note receivable Interest receivable Prepaid rent Prepaid insurance Office equipment 2,900 0 98,000 Accumulated depreciation-office equipment Accounts payable 36,750 39,00 wages payable Note navable Interest payable 73,200 0 Deferred revenue C Common stock 60,000 Retained earnings 24,000 Sales revenue 243,000 Interest revenue Cost of goods sold Salaries and wages expense 109,350 20,700 Rent expense Depreciation expense Interest expense Supplies expense 15,950 0 1,450 6,600 Insurance expense Advertising expense 3,900 Totals 475 , 950 475,950 Information necessary to prepare the year-end adjusting entries appears below. 1. Depreciation on the office equipment for the year is $12,2 50. 2. Employee salaries and wages are paid twice a month, on the 22nd for salaries and wages earned from the 1st through the 15th, and on the 7th of the following month for salaries and wages earned from the 16th through the end of the month. Salaries and wages earned from December 16 through December 31, 2018, were $1,750. 3. On October 1, 2018, Pastina borrowed $73,200 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, 2018, the company lent a supplier $31,200 and a note was signed requiring principal and interest at 8% to be paid on February 28, 2019. 5. On April 1, 2018, the company paid an insurance company $6,600 for a two-year fire insurance policy. The entire $6,600 was debited to insurance expense. 6. $1,040 of supplies remained on hand at December 31, 2018. 7. A customer paid Pastina $2,040 in December for 1,700 pounds of spaghetti to be delivered in January 2019. Pastina credited sales revenue. 8. On December 1, 2018, $2,900 rent was paid to the owner of the building. The payment represented rent for December 2018 and January 2019, at $1,450 per month. 4. Prepare the income statement, statement of shareholders' equity and classified balance sheet for the year ended December 31, 2018 Complete this question by entering your answers in the tabs below. Statement of Income Balance Sheet Statement Prepare the statement of shareholders' equity for the year ended December 31, 2018. PASTINA COMPANY Statement of Shareholders' Equity For the Year Ended December 31, 2018 Total Common Retained Shareholders' Earnings Stock Equity 60,000 $ Balance at January 1, 2018 Add: Net income 70,659 Less: Dividends 272,845 60,000 94,659 $ 154,659 Balance at December 31, 20188

Answer 1

Pastina Company Adjustment Enteries Particulars Debit in $ Credit in $ Date 31.12.2018 Depreciation Expense - Off Equip a/c To Accum. Depre Off. Equip (To record depreciation) Dr. 12250 12250 - 31.12.2018 Salaries and wages expense a/c Dr. 1750 To Salaries and wages payable 1750 (Salary and wages accrued) 31.12.2018 Interest expense a/c Dr. 2196 To Interest payable 2196 (Interest accrued) 73200 x 12% x 3/12 2196 31.12.2018 Interest Receivable a/c Dr. 2080 To Interest Income 2080 (Interest income accrued) 31200 x 8% x 10/12 2080 31.12.2018 Prepaid Insurance a/c Dr. 4125 To Insurance Expense 4125 (Prepaid Insurance recorded) 6600 x 15/24 31.12.2018 Supplies Expense a/c Dr. 910 To Supplies 910 (Supplies Expensed)1950-1040= 910 31.12.2018 Sales a/c Dr. 2040 To Deferred Revenue 2040 (Revenue not to be considered) 31.12.2018 Rent Expense a/c Dr. 1450 To Prepaid Rent 1450 (Rent Expensed)

Adjusted Trial Balance For the period ending 31.12.2018 Debit in $ Credit in $ Particulars Cash 44950 Accounts receivable 60000 Supplies 1040 Inventory 79000 Note receivable 31200 Interest receivable 2080 Prepaid rent 1450 Prepaid insurance Office equipment 4125 98000 Accumulated depreciation-office equipment 49000 Accounts payable 39000 Salaries and wages payable 1750 Note payable 73200 Interest payable 2196 Deferred revenue 2040 Common stock 60000 Retained earnings 24000 Sales revenu 240960 e Interest revenue 2080 Cost of goods sold Salaries and wages expense 109350 22450 Rent expense 17400 Depreciation expense 12250 Interest expense 2196 Supplies expense 2360 Insurance expense 2475 Advertising expense 3900 Totals 494226 494226

Statement of Income For the period ending 31.12.2018 Sales revenue 240960 Cost of goods sold -109350 Gross Profit 131610 Oerating Expenses: Salaries and wages expense 22450 Rent expense 17400 Depreciation expense 12250 Supplies expense 2360 Insurance expense 75 Advertising expense 3900 60835 70775 Operating Profit Non Operating Items: Interest revenue 2080 Interest expense -2196 -116 Net Income 70659 Statement of Retained Earnings For the period ending 31.12.2018 Beginning 24000 Net Income 70659 94659

Balance sheet As at 31.12.2018 Amounts in $ Amounts in $ Liabilities Amounts in $ Amounts in $ Assets Current Liabilities Current Assets Accounts payable Cash 44950 39000 Salaries and wages payable Accounts receivable 60000 1750 Supplies Interest payable 1040 2196 79000 Deferred revenue Inventory 2040 44986 Note receivable 31200 Interest receivable Non Current Liabilities 2080 Note payable Prepaid rent 1450 73200 Prepaid insurance 2 5 Shareholders Equity Non Current Assets Office equipment Common stock 98000 60000 Accumulated depreci 49000 Retained earnings -49000 94659 154659 272845 Total Liabilities & Equity Total Assets 272845