Pastina Company sells various types of pasta to grocery chains as private label brands. The company's reporting year-end is December 31. The unadjusted trial balance as of December 31, 2024, appears below.
Account Title
Cash
Debits
$ 36,400
Credits
Accounts receivable
43,600
Supplies
3,300
Inventory
63,600
Notes receivable
23,600
Interest receivable
0
Prepaid rent
2,800
Prepaid insurance
9,600
Office equipment
94,400
Accumulated depreciation
$ 35,400
Accounts payable
Salaries payable
34,600
0
Notes payable
53,600
Interest payable
0
Deferred sales revenue
3,800
Common stock
85,200
Retained earnings
37,500
Dividends
7,600
Sales revenue
164,000
Interest revenue
0
Cost of goods sold
88,000
Salaries expense
20,700
Rent expense
12,800
Depreciation expense
0
Interest expense
0
Supplies expense
2,900
0
Insurance expense
Advertising expense
4,800
Totals
$ 414,100
$ 414,100
Information necessary to prepare the year-end adjusting entries appears below.
1. Depreciation on the office equipment for the year is $11,800.
2. Employee salaries are paid twice a month, on the 22nd for salaries earned from the 1st through the 15th, and on the 7th of the following month for salaries earned from the 16th through the end of the month. Salaries earned from December 16 through December 31, 2024, were $1,700.
3. On October 1, 2024, Pastina borrowed $53,600 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, 2024, the company lent a supplier $23,600, and a note was signed requiring principal and interest at 8% to be paid on February 28, 2025.
5. On April 1, 2024, the company paid an insurance company $9,600 for a one-year fire insurance policy. The entire $9,600 was debited to prepaid insurance at the time of the payment.
6. $1,010 of supplies remained on hand on December 31, 2024.
7. The company received $3,800 from a customer in December for 1,650 pounds of spaghetti to be delivered in January 2025. Pastina credited deferred sales revenue at the time cash was received.
8. On December 1, 2024, $2,800 rent was paid to the owner of the building. The payment represented rent for December 2024 and January 2025 at $1,400 per month. The entire amount was debited to prepaid rent at the time of the payment.
Required:
1 to 3. First, post the unadjusted balances from the unadjusted trial balance that was given and the adjusting entries that were made in Problem 2-3 into the appropriate T-accounts (on the T-accounts tab). Then prepare an adjusted trial balance.
4-a. Prepare an income statement for the year ended December 31, 2024. Assume that no common stock was issued during the year and that $7,600 in cash dividends were paid to shareholders during the year.
4-b. Prepare a statement of shareholders' equity for the year ended December 31, 2024. Assume that no common stock was issued
