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 30,000     Accounts receivable 40,000     Supplies 1,500     Inventory 60,000     Notes receivable 20,000     Interest receivable 0     Prepaid rent 2,000     Prepaid insurance 6,000     Office equipment 80,000     Accumulated depreciation     30,000 Accounts payable     31,000 Salaries payable     0 Notes payable     50,000 Interest payable     0 Deferred sales revenue     2,000 Common stock     60,000 Retained earnings     28,500 Dividends 4,000     Sales revenue     146,000 Interest revenue     0 Cost of goods sold 70,000     Salaries expense 18,900     Rent expense 11,000     Depreciation expense 0     Interest expense 0     Supplies expense 1,100     Insurance expense 0     Advertising expense 3,000     Totals 347,500   347,500       Information necessary to prepare the year-end adjusting entries appears below. Depreciation on the office equipment for the year is $10,000. 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 $50,000 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 $20,000, 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 $6,000 for a two-year fire insurance policy. The entire $6,000 was debited to prepaid insurance. $800 of supplies remained on hand at December 31, 2021. A customer paid Pastina $2,000 in December for 1,500 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
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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 30,000    
Accounts receivable 40,000    
Supplies 1,500    
Inventory 60,000    
Notes receivable 20,000    
Interest receivable 0    
Prepaid rent 2,000    
Prepaid insurance 6,000    
Office equipment 80,000    
Accumulated depreciation     30,000
Accounts payable     31,000
Salaries payable     0
Notes payable     50,000
Interest payable     0
Deferred sales revenue     2,000
Common stock     60,000
Retained earnings     28,500
Dividends 4,000    
Sales revenue     146,000
Interest revenue     0
Cost of goods sold 70,000    
Salaries expense 18,900    
Rent expense 11,000    
Depreciation expense 0    
Interest expense 0    
Supplies expense 1,100    
Insurance expense 0    
Advertising expense 3,000    
Totals 347,500   347,500
 

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

  1. Depreciation on the office equipment for the year is $10,000.
  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 $50,000 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 $20,000, 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 $6,000 for a two-year fire insurance policy. The entire $6,000 was debited to prepaid insurance.
  6. $800 of supplies remained on hand at December 31, 2021.
  7. A customer paid Pastina $2,000 in December for 1,500 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.)

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