Pastina Company sells various types of pasta
| [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, 2016, appears below. |
| Account Title | Debits | Credits |
| Cash | 44,600 | |
| Accounts receivable | 61,000 | |
| Supplies | 2,000 | |
| Inventory | 80,000 | |
| Note receivable | 32,100 | |
| Interest receivable | 0 | |
| Prepaid rent | 3,000 | |
| Prepaid insurance | 0 | |
| Office equipment | 100,000 | |
| Accumulated depreciation—office equipment | 37,500 | |
| Accounts payable | 40,000 | |
| Salaries and wages payable | 0 | |
| Note payable | 74,100 | |
| Interest payable | 0 | |
| Deferred revenue | 0 | |
| Common stock | 60,000 | |
| Retained earnings | 24,500 | |
| Sales revenue | 248,000 | |
| Interest revenue | 0 | |
| Cost of goods sold | 111,600 | |
| Salaries and wages expense | 21,000 | |
| Rent expense | 16,500 | |
| Depreciation expense | 0 | |
| Interest expense | 0 | |
| Supplies expense | 1,500 | |
| Insurance expense | 6,800 | |
| Advertising expense | 4,000 | |
| Totals | 484,100 | 484,100 |
| Information necessary to prepare the year-end adjusting entries appears below. | |||||||||
| 1. | Depreciation on the office equipment for the year is $12,500. | ||||||||
| 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, 2016, were $1,800. | ||||||||
| 3. | On October 1, 2016, Pastina borrowed $74,100 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, 2016, the company lent a supplier $32,100 and a note was signed requiring principal and interest at 8% to be paid on February 28, 2017. | ||||||||
| 5. | On April 1, 2016, the company paid an insurance company $6,800 for a two-year fire insurance policy. The entire $6,800 was debited to insurance expense. | ||||||||
| 6. | $1,070 of supplies remained on hand at December 31, 2016. | ||||||||
| 7. | A customer paid Pastina $2,100 in December for 1,750 pounds of spaghetti to be delivered in January 2017. Pastina credited sales revenue. | ||||||||
| 8. | On December 1, 2016, $3,000 rent was paid to the owner of the building. The payment represented rent for December 2016 and January 2017, at $1,500 per month.
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Rating:
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Solution: Pastina Company sells various types of pasta