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   36,000         Accounts receivable   43,000         Supplies   3,000         Inventory   63,000         Notes receivable   23,000         Interest receivable   0         Prepaid rent   2,000         Prepaid insurance   7,500         Office equipment   92,000         Accumulated depreciation         34,500   Accounts payable         34,000   Salaries payable         0   Notes payable         53,000   Interest payable         0   Deferred sales revenue         3,500   Common stock         79,500   Retained earnings         36,000   Dividends   7,000         Sales revenue         161,000   Interest revenue         0   Cost of goods sold   85,000         Salaries expense   20,400         Rent expense   12,500         Depreciation expense   0         Interest expense   0         Supplies expense   2,600         Insurance expense   0         Advertising expense   4,500         Totals   401,500     401,500       Information necessary to prepare the year-end adjusting entries appears below.   Depreciation on the office equipment for the year is $11,500. 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 $1,500. On October 1, 2021, Pastina borrowed $53,000 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. On March 1, 2021, the company lent a supplier $23,000 and a note was signed requiring principal and interest at 8% to be paid on February 28, 2022. On April 1, 2021, the company paid an insurance company $7,500 for a one-year fire insurance policy. The entire $7,500 was debited to prepaid insurance. $800 of supplies remained on hand at December 31, 2021. A customer paid Pastina $1,500 in December for 1,590 pounds of spaghetti to be delivered in January 2022. Pastina credited deferred sales revenue. On December 1, 2021, $2,000 rent was paid to the owner of the building. The payment represented rent for December 2021 and January 2022, at $1,000 per month. The entire amount was debited to prepaid rent.   Required: Prepare the necessary December 31, 2021, adjusting journal entries. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Round your final answers to nearest whole dollar amount.)

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Topic Video
Question

1.

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   36,000        
Accounts receivable   43,000        
Supplies   3,000        
Inventory   63,000        
Notes receivable   23,000        
Interest receivable   0        
Prepaid rent   2,000        
Prepaid insurance   7,500        
Office equipment   92,000        
Accumulated depreciation         34,500  
Accounts payable         34,000  
Salaries payable         0  
Notes payable         53,000  
Interest payable         0  
Deferred sales revenue         3,500  
Common stock         79,500  
Retained earnings         36,000  
Dividends   7,000        
Sales revenue         161,000  
Interest revenue         0  
Cost of goods sold   85,000        
Salaries expense   20,400        
Rent expense   12,500        
Depreciation expense   0        
Interest expense   0        
Supplies expense   2,600        
Insurance expense   0        
Advertising expense   4,500        
Totals   401,500     401,500  
 

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

  1. Depreciation on the office equipment for the year is $11,500.
  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 $1,500.
  3. On October 1, 2021, Pastina borrowed $53,000 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 $23,000 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 $7,500 for a one-year fire insurance policy. The entire $7,500 was debited to prepaid insurance.
  6. $800 of supplies remained on hand at December 31, 2021.
  7. A customer paid Pastina $1,500 in December for 1,590 pounds of spaghetti to be delivered in January 2022. Pastina credited deferred sales revenue.
  8. On December 1, 2021, $2,000 rent was paid to the owner of the building. The payment represented rent for December 2021 and January 2022, at $1,000 per month. The entire amount was debited to prepaid rent.

 
Required:
Prepare the necessary December 31, 2021, adjusting journal entries. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Round your final answers to nearest whole dollar amount.)
 

 

Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

Blurred answer
Knowledge Booster
Accounting Equation
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education