Pastina Company sells various types of pasta to grocery chains as private label
ID: 2410123 • Letter: P
Question
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.
Information necessary to prepare the year-end adjusting entries appears below.
Depreciation on the office equipment for the year is $8,250.
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, 2018, were $950.
On October 1, 2018, Pastina borrowed $47,700 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.
On March 1, 2018, the company lent a supplier $17,700 and a note was signed requiring principal and interest at 8% to be paid on February 28, 2019.
On April 1, 2018, the company paid an insurance company $3,600 for a two-year fire insurance policy. The entire $3,600 was debited to insurance expense.
$590 of supplies remained on hand at December 31, 2018.
A customer paid Pastina $1,140 in December for 950 pounds of spaghetti to be delivered in January 2019. Pastina credited sales revenue.
Account Title Debits Credits Cash 40,600 Accounts receivable 44,000 Supplies 1,150 Inventory 64,000 Note receivable 17,700 Interest receivable 0 Prepaid rent 1,300 Prepaid insurance 0 Office equipment 66,000 Accumulated depreciation—office equipment 24,750 Accounts payable 23,000 Salaries and wages payable 0 Note payable 47,700 Interest payable 0 Deferred revenue 0 Common stock 60,000 Retained earnings 16,500 Sales revenue 168,000 Interest revenue 0 Cost of goods sold 75,600 Salaries and wages expense 15,900 Rent expense 7,150 Depreciation expense 0 Interest expense 0 Supplies expense 650 Insurance expense 3,600 Advertising expense 2,300 Totals 339,950 339,950 Required information Income Statement of Statement Balance Sheet SE Prepare the income statement for the year ended December 31, 2018. (Other expenses should be indicated with a minus sign.) PASTINA COMPANY Income Statement For the Year Ended December 31, 2018 Prev 6 of 91 : Next>Explanation / Answer
Income Statement, Statement of equity and Balance Sheet is as prepared below:
Working:
Pastina Company Income Statement For the Year Ended Dec 31, 2018 Particulars Amount ($) Amount ($) Sales revenue 166,860 Interest revenue 1,180 Less: Expense Cost of goods sold 75,600 Salaries and wages expense 16,850 Rent expense 7,800 Depreciation expense 8,250 Interest expense 1,431 Supplies expense 1,210 Insurance expense 1,350 Advertising expense 2,300 114,791 Net income 53,249