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, 2024, appears below. Account Title Debits Credits Cash $ 32,600 Accounts receivable 41,000 Supplies 2,000 Inventory 61,000 Notes receivable 21,000 Interest receivable 0 Prepaid rent 1,400 Prepaid insurance 7,000 Office equipment 84,000 Accumulated depreciation $ 31,500 Accounts payable 32,000 Salaries payable 0 Notes payable 51,000 Interest payable 0 Deferred sales revenue 2,500 Common stock 67,000 Retained earnings 31,000 Dividends 5,000 Sales revenue 151,000 Interest revenue 0 Cost of goods sold 75,000 Salaries expense 19,400 Rent expense 11,500 Depreciation expense 0 Interest expense 0 Supplies expense 1,600 Insurance expense 0 Advertising expense 3,500 Totals $ 366,000 $ 366,000 Information necessary to prepare the year-end adjusting entries appears below. On April 1, 2024, the company paid an insurance company $7,000 for a one-year fire insurance policy. The entire $7,000 was debited to prepaid insurance at the time of the payment. $620 of supplies remained on hand on December 31, 2024. The company received $2,500 from a customer in December for 1,000 pounds of spaghetti to be delivered in January 2025. Pastina credited deferred sales revenue at the time cash was received. On December 1, 2024, $1,400 rent was paid to the owner of the building. The payment represented rent for December 2024 and January 2025 at $700 per month. The entire amount was debited to prepaid rent at the time of the payment.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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, 2024, appears below.

Account Title	Debits	Credits
Cash	$ 32,600
Accounts receivable	41,000
Supplies	2,000
Inventory	61,000
Notes receivable	21,000
Interest receivable	0
Prepaid rent	1,400
Prepaid insurance	7,000
Office equipment	84,000
Accumulated depreciation		$ 31,500
Accounts payable		32,000
Salaries payable		0
Notes payable		51,000
Interest payable		0
Deferred sales revenue		2,500
Common stock		67,000
Retained earnings		31,000
Dividends	5,000
Sales revenue		151,000
Interest revenue		0
Cost of goods sold	75,000
Salaries expense	19,400
Rent expense	11,500
Depreciation expense	0
Interest expense	0
Supplies expense	1,600
Insurance expense	0
Advertising expense	3,500
Totals	$ 366,000	$ 366,000

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

On April 1, 2024, the company paid an insurance company $7,000 for a one-year fire insurance policy. The entire $7,000 was debited to prepaid insurance at the time of the payment.
$620 of supplies remained on hand on December 31, 2024.
The company received $2,500 from a customer in December for 1,000 pounds of spaghetti to be delivered in January 2025. Pastina credited deferred sales revenue at the time cash was received.
On December 1, 2024, $1,400 rent was paid to the owner of the building. The payment represented rent for December 2024 and January 2025 at $700 per month. The entire amount was debited to prepaid rent at the time of the payment.

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