The following information applies to the questions displayed below.] Pastina Com

Question

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, 2018, appears below Account Title Cash Accounts receivable Supplies Inventory Note receivable Interest receivable Prepaid rent Prepaid insurance Office equipment Accumulated depreciation-office equipment Accounts payable Salaries and wages payable Note payable Interest payable Deferred revenue Common stock Retained earnings Sales revenue Interest revenue Cost of goods sold Salaries and wages expense Rent expense Depreciation expense Interest expense Supplies expense Insurance expense Advertising expense Totals Debits Credits 39,900 46,000 1,250 66,000 19,500 1,500 70,000 26,250 25,000 49,500 60,000 17,500 178,000 80,100 16,500 8,250 750 4,000 2,500 356,250 356,250

Explanation / Answer

Adjusting Journal Entry Date Particulars Dr. Amt. Cr. Amt. 1 Depreciation Expense      8,750.00    Accumulated Depreciation - Office Equip.      8,750.00 2 Salaries & Wages Expense      1,050.00    Salaries & Wages Payable      1,050.00 3 Interest Expense ($49,500 X 12% X 3/12)      1,485.00    Interest Payable      1,485.00 4 Interest Receivable ($19,500 X 8% X 10/12)      1,300.00    Interest Revenue      1,300.00 5 Prepaid Insurance ($4,000 X 15/24)      2,500.00    Insurance Expense      2,500.00 6 Supplies Expense ($1,250 - $650)          600.00    Supplies          600.00 7 Sales Revenue      1,260.00    Deferred Revenue      1,260.00 8 Rent Expense          750.00    Prepaid Rent          750.00 Cash Accounts Receivable Supplies Bal.      39,900.00 Bal.      46,000.00 Bal.      1,250.00            600.00 6 End. Bal.      39,900.00 End. Bal.      46,000.00 End. Bal.          650.00 Inventory Notes Receivable Interest Receivable Bal.      66,000.00 Bal.      19,500.00 Bal.                   -   4      1,300.00 End. Bal.      66,000.00 End. Bal.      19,500.00 End. Bal.      1,300.00 Prepaid Rent Prepaid Insurance Office Equipment Bal.        1,500.00            750.00 8 Bal.                     -   Bal.    70,000.00 5        2,500.00 End. Bal.            750.00 End. Bal.        2,500.00 End. Bal.    70,000.00 Accumulated Dep. - Office Equip. Accounts Payable Salaries & Wages Payable Bal.      26,250.00 Bal.    25,000.00 Bal.                     -          8,750.00 1        1,050.00 2 End. Bal.      35,000.00 End. Bal.    25,000.00 End. Bal.        1,050.00 Notes Payable Interest Payable Deferred Revenue Bal.      49,500.00 Bal.                   -   Bal.                     -        1,485.00 3        1,260.00 7 End. Bal.      49,500.00 End. Bal.      1,485.00 End. Bal.        1,260.00 Common Stock Retained Earnings Sales Revenue Bal.      60,000.00 Bal.    17,500.00 Bal.    178,000.00 7      1,260.00 End. Bal.      60,000.00 End. Bal.    17,500.00 End. Bal.    176,740.00 Interest Revenue Cost of Goods Sold Salaries and Wages Expense Bal.                     -   Bal.      80,100.00 Bal.    16,500.00        1,300.00 4 2      1,050.00 End. Bal.        1,300.00 End. Bal.      80,100.00 End. Bal.    17,550.00 Rent Expense Depreciation Expense Interest Expense Bal.        8,250.00 Bal.                     -   Bal.                   -   8            750.00 1        8,750.00 3      1,485.00 End. Bal.        9,000.00 End. Bal.        8,750.00 End. Bal.      1,485.00 Supplies Expense Insurance Expense Advertising Expense Bal.            750.00 Bal.        4,000.00      2,500.00 5 Bal.      2,500.00 6            600.00 End. Bal.        1,350.00 End. Bal.        1,500.00 End. Bal.      2,500.00 PASTINA COMPANY Adjusted Trial Balance As on Dec 31, 2018 Accounts Title Debits Credits Cash      39,900.00 Accounts Receivable      46,000.00 Supplies            650.00 Inventory      66,000.00 Notes Receivable      19,500.00 Interest Receivable        1,300.00 Prepaid Rent            750.00 Prepaid Insurance        2,500.00 Office Equipment      70,000.00 Accumulated Dep. - Office Equip.      35,000.00 Accounts Payable      25,000.00 Salaries & Wages Payable        1,050.00 Notes Payable      49,500.00 Interest Payable        1,485.00 Deferred Revenue        1,260.00 Common Stock      60,000.00 Retained Earnings      17,500.00 Sales Revenue    176,740.00 Interest Revenue        1,300.00 Cost of Goods Sold      80,100.00 Salaries and Wages Expense      17,550.00 Rent Expense        9,000.00 Depreciation Expense        8,750.00 Interest Expense        1,485.00 Supplies Expense        1,350.00 Insurance Expense        1,500.00 Advertising Expense        2,500.00 Total    368,835.00    368,835.00                     -   Answer 4. PASTINA COMPANY Income Statement For the Year Ended Dec 31, 2018 Sales Revenue    176,740.00 Cost of Goods Sold      80,100.00 Gross Profit      96,640.00 Expenses Salaries and Wages Expense      17,550.00 Rent Expense        9,000.00 Depreciation Expense        8,750.00 Supplies Expense        1,350.00 Insurance Expense        1,500.00 Advertising Expense        2,500.00      40,650.00 Net Operating Income      55,990.00 Other Income & Expenses Interest Revenue        1,300.00 Interest Expense        1,485.00            185.00 Net Income      55,805.00 PASTINA COMPANY Statement of Shareholders' Equity For The Year Ended Dec 31, 2018 Common Stock Retained Earnings Total   Balance at Jan 1, 2018      60,000.00      17,500.00      77,500.00 Net Income      55,805.00      55,805.00 Balance at Dec 31, 2018      60,000.00      73,305.00    133,305.00 PASTINA COMPANY Balance Sheet At Dec 31, 2018 Assets Current Assets Cash      39,900.00 Accounts Receivable      46,000.00 Supplies            650.00 Inventory      66,000.00 Notes Receivable      19,500.00 Interest Receivable        1,300.00 Prepaid Rent            750.00 Prepaid Insurance        2,500.00    176,600.00 Property, Plant & Equipment Office Equipment      70,000.00 Accumulated Dep. - Office Equip.    (35,000.00)      35,000.00 Total Assets    211,600.00 Liabilities & Stockholders' Equity Liabilities Current Liabilities Accounts Payable      25,000.00 Salaries & Wages Payable        1,050.00 Interest Payable        1,485.00 Deferred Revenue        1,260.00      28,795.00 Long Term Liabilities Notes Payable      49,500.00 Total Liabilities      78,295.00 Stockholders' Equity    133,305.00 Liabilities & Stockholders' Equity    211,600.00                     -   PASTINA COMPANY Post Closing Trial Balance As on Dec 31, 2018 Accounts Title Debits Credits Cash      39,900.00 Accounts Receivable      46,000.00 Supplies            650.00 Inventory      66,000.00 Notes Receivable      19,500.00 Interest Receivable        1,300.00 Prepaid Rent            750.00 Prepaid Insurance        2,500.00 Office Equipment      70,000.00 Accumulated Dep. - Office Equip.      35,000.00 Accounts Payable      25,000.00 Salaries & Wages Payable        1,050.00 Notes Payable      49,500.00 Interest Payable        1,485.00 Deferred Revenue        1,260.00 Common Stock      60,000.00 Retained Earnings      73,305.00 Total    246,600.00    246,600.00 Closing Journal Entry Date Particulars Dr. Amt. Cr. Amt. 31-Dec-18 Income Summary    122,235.00 Cost of Goods Sold      80,100.00 Salaries and Wages Expense      17,550.00 Rent Expense        9,000.00 Depreciation Expense        8,750.00 Interest Expense        1,485.00 Supplies Expense        1,350.00 Insurance Expense        1,500.00 Advertising Expense        2,500.00 (To record the closing of expenses account) 31-Dec-18 Sales Revenue    176,740.00 Interest Revenue        1,300.00 Income Summary    178,040.00 (To record the closing of revenues account) 31-Dec-18 Income Summary      55,805.00 Retained Earnings      55,805.00 (To record the net income earned)

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