Hey guys, can anyone help with with the question below? Thanks. Problem 2-4 Acco
ID: 2350542 • Letter: H
Question
Hey guys, can anyone help with with the question below? Thanks. Problem 2-4 Accounting cycle; adjusting entries through post-closing trial balance [LO2-3, 2-5, 2-6, 2-7] Pastina Company manufactures and 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, 2013, appears below. Account Title Debits Credits Cash 30,000 Accounts receivable 40,000 Supplies 1,500 Inventory 60,000 Note receivable 20,000 Interest receivable 0 Prepaid rent 2,000 Prepaid insurance 0 Equipment 80,000 Accumulated depreciationExplanation / Answer
1. Depreciation on the equipment for the year is $10,000. Depreciation Expense (Dr.) 10000 Accumulated depreciation (Cr.) 10000 2. Employee wages are paid twice a month, on the 22nd for wages earned from the 1st through the 15th, and on the 7th of the following month for wages earned from the 16th through the end of the month. Wages earned from December 16 through December 31, 2013, were $1,500. Wages expense (Dr.) 1500 Wages payable (Cr.) 1500 3. On October 1, 2013, 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. Interest expense (Dr.) 1500 (50000*.12/12*3) Interest payable (Cr.) 1500 4. On March 1, 2013, the company lent a supplier $20,000 and a note was signed requiring principal and interest at 8% to be paid on February 28, 2014. Interest receivable (Dr.) 1360 (20000*.08/360*306) or 1333.33 (20000*.08/12*10--not sure how your book calculates) Interest revenue (Cr.) 1360 5. On April 1, 2013, the company paid an insurance company $6,000 for a two-year fire insurance policy. The entire $6,000 was debited to insurance expense. Prepaid insurance (Dr.) 3750 (6000/2/12*15) Insurance expense (Cr.) 3750 6. $800 of supplies remained on hand at December 31, 2013. Supplies expense (Dr.) 700 (1500-800) Supplies (Cr.) 700 7. A customer paid Pastina $2,000 in December for 1,500 pounds of spaghetti to be manufactured and delivered in January 2014. Pastina credited sales revenue. Sales revenue (Dr.) 2000 Unearned revenue (Cr.) 2000 8. On December 1, 2013, $2,000 rent was paid to the owner of the building. The payment represented rent for December and January 2014, at $1,000 per month. (Assuming they debited rent expense) Prepaid Rent (Dr.) 1000 Rent expense (Cr.) 1000 (Assuming they debited prepaid rent) Rent expense (Dr.) 1000 Prepaid rent (Cr.) 1000 Hope this helps!