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Problem 2-4 (Algo) Accounting cycle; adjusting entries through post-closing trial balance [LO2-4, 2-6, 2-7, 2-8]

[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 reporting year-end is December 31. The unadjusted trial balance as of December 31, 2021, appears below.

   

Account Title	Debits		Credits
Cash	36,700
Accounts receivable	43,800
Supplies	3,400
Inventory	63,800
Notes receivable	23,800
Interest receivable	0
Prepaid rent	2,900
Prepaid insurance	9,800
Office equipment	95,200
Accumulated depreciation			35,700
Accounts payable			34,800
Salaries payable			0
Notes payable			53,800
Interest payable			0
Deferred sales revenue			3,900
Common stock			86,600
Retained earnings			38,000
Dividends	7,800
Sales revenue			165,000
Interest revenue			0
Cost of goods sold	89,000
Salaries expense	20,800
Rent expense	12,900
Depreciation expense	0
Interest expense	0
Supplies expense	3,000
Insurance expense	0
Advertising expense	4,900
Totals	417,800		417,800

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

1. Depreciation on the office equipment for the year is $11,900.
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 $1,750.
3. On October 1, 2021, Pastina borrowed $53,800 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 $23,800 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 $9,800 for a one-year fire insurance policy. The entire $9,800 was debited to prepaid insurance.
6. $1,040 of supplies remained on hand at December 31, 2021.
7. A customer paid Pastina $3,900 in December for 1,700 pounds of spaghetti to be delivered in January 2022. Pastina credited deferred sales revenue.
8. On December 1, 2021, $2,900 rent was paid to the owner of the building. The payment represented rent for December 2021 and January 2022 at $1,450 per month. The entire amount was debited to prepaid rent.

rev: 09_14_2019_QC_CS-180268, 10_11_2019_QC_CS-184133

Problem 2-4 (Algo) Part 3

3. Prepare an adjusted trial balance. (Do not round intermediate calculations. Round your final answers to nearest whole dollar.)

Answer 1

The unadjusted trial balance as of December 31, 2021, appears below.

Adjusted Trial balance

Account Title	Debits		Credits
Cash	36,700
Accounts receivable	43,800
Supplies	1040
Inventory	63,800
Notes receivable	23,800
Interest receivable	1587
Prepaid rent	1450
Prepaid insurance	6125
Office equipment	95,200
Accumulated depreciation			47600
Accounts payable			34,800
Salaries payable			1750
Notes payable			53,800
Interest payable			1614
Deferred sales revenue			3,900
Common stock			86,600
Retained earnings			38,000
Dividends	7,800
Sales revenue			165,000
Interest revenue			1587
Cost of goods sold	89,000
Salaries expense	22550
Rent expense	14350
Depreciation expense	11900
Interest expense	1614
Supplies expense	5360
Insurance expense	3675
Advertising expense	4,900
Totals	434651		434651