Sep 26, 2017 term paper 2

PASTINA COMPANY SELLS VARIOUS TYPES OF PASTA TO GROCERY CHAINS AS PRIVATE LABEL BRANDS. THE COMPANY’S FISCAL YEAR-END IS DECEMBER…

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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 TitleDebitsCredits
  Cash30,000
  Accounts receivable40,000
  Supplies1,500
  Inventory60,000
  Note receivable20,000
  Interest receivable0
  Prepaid rent2,000
  Prepaid insurance0
  Office equipment80,000
  Accumulated depreciation—office equipment30,000
  Accounts payable31,000
  Salaries and wages payable0
  Note payable50,000
  Interest payable0
  Deferred revenue0
  Common stock60,000
  Retained earnings24,500
  Sales revenue148,000
  Interest revenue0
  Cost of goods sold70,000
  Salaries and wages expense18,900
  Rent expense11,000
  Depreciation expense0
  Interest expense0
  Supplies expense1,100
  Insurance expense6,000
  Advertising expense3,000


          Totals343,500343,500





 

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 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 $1,500.

 3.

On October 1, 2016, 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, 2016, the company lent a supplier $20,000 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 $6,000 for a two-year fire insurance policy. The entire $6,000 was debited to insurance expense.

 6.$800 of supplies remained on hand at December 31, 2016.
 7.

A customer paid Pastina $2,000 in December for 1,500 pounds of spaghetti to be delivered in January 2017. Pastina credited sales revenue.

 8.

On December 1, 2016, $2,000 rent was paid to the owner of the building. The payment represented rent for December 2016 and January 2017, at $1,000 per month.


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