Pastina Company manufactures and sells various types of pasta to grocery chains
ID: 2460702 • Letter: P
Question
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.
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.
On October 1, 2013, Pastina borrowed $48,000 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.
On March 1, 2013, the company lent a supplier $18,000 and a note was signed requiring principal and interest at 8% to be paid on February 28, 2014.
On April 1, 2013, the company paid an insurance company $5,760 for a two-year fire insurance policy. The entire $5,760 was debited to insurance expense.
$800 of supplies remained on hand at December 31, 2013.
A customer paid Pastina $1,800 in December for 1,440 pounds of spaghetti to be manufactured and delivered in January 2014. Pastina credited sales revenue.
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.
Prepare the necessary December 31, 2013, adjusting journal entries. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.Do not round intermediate calculations. Round your answers to the nearest dollar amount.)
Account Title Debits Credits Cash 28,000 Accounts receivable 38,000 Supplies 1,500 Inventory 58,000 Note receivable 18,000 Interest receivable 0 Prepaid rent 2,000 Prepaid insurance 0 Equipment 80,000 Accumulated depreciation—equipment 30,000 Accounts payable 29,000 Wages payable 0 Note payable 48,000 Interest payable 0 Unearned revenue 0 Common stock 58,000 Retained earnings 21,860 Sales revenue 146,000 Interest revenue 0 Cost of goods sold 68,000 Wage expense 18,700 Rent expense 11,000 Depreciation expense 0 Interest expense 0 Supplies expense 1,100 Insurance expense 5,760 Advertising expense 2,800 Totals 332,860 332,860Explanation / Answer
Debit Depreciation expenses 10,000 Credit Accumulated Depreciation 10,000 Debit Wages Expenses 1,500 Credit Wages Payable 1,500 Debit Interest expenses 1,440 (48000*12%*3/12) Credit Interest Payable 1,440 Debit Interest Receiveble 1,200 (18000*8%*10/12) Credit Interest Income 1,200 Debit Prepaid insurance 3,600 (5760/24*15) Credit Insurance expenses 3,600 Debit Supplies Expenses 700 (1500-800) Credi Supplies 700 Debit sales revenue 1,800 Credit unearned Income 1,800 Debit Rent expenses 1,000 Credit Prepaid Rent 1,000