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, 2021, appears below. Account Title Debits Credits Cash Accounts receivable Supplies Inventory Notes receivable 35,200 42,800 2,900 62,800 22,800 Interest receivable Prepaid rent Prepaid insurance Office equipment Accumulated depreciation Accounts payable Salaries payable Notes payable Interest payable Deferred sales revenue 2,400 8,800 91,200 34,200 33,800 52,800 3,400 79,600 35,500 Common stock Retained earnings Dividends 6,800 Sales revenue 160,000 Interest revenue Cost of goods sold Salaries expense Rent expense Depreciation expense 84,000 20,300 12,400 Interest expense Supplies expense Insurance expense 2,500 Advertising expense 4,400 Totals 399,300 399,300 Information necessary to prepare the year-end adjusting entries appears below. 1. Depreciation on the office equipment for the year is $11,400. 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, 2021, were $1,450. 3. On October 1, 2021, Pastina borrowed $52,800 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, 2021, the company lent a supplier $22,800 and a note was signed requiring principal and interest at 8% to be paid on February 28, 2022. 5. On April 1, 2021, the company paid an insurance company $8,800 for a one-year fire insurance policy. The entire $8,800 was debited to prepaid insurance. 6. $890 of supplies remained on hand at December 31, 2021. 7. A customer paid Pastina $3,400 in December for 1,450 pounds of spaghetti to be delivered in January 2022. Pastina credited deferred sales revenue. 8. On December 1, 2021, $2,400 rent was paid to the owner of the building. The payment represented rent for December 2021 and January 2022 at $1,200 per month. The entire amount was debited to prepaid rent.

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, 2021, appears below. Account Title Debits Credits Cash Accounts receivable Supplies Inventory Notes receivable 35,200 42,800 2,900 62,800 22,800 Interest receivable Prepaid rent Prepaid insurance Office equipment Accumulated depreciation Accounts payable Salaries payable Notes payable Interest payable Deferred sales revenue 2,400 8,800 91,200 34,200 33,800 52,800 3,400 79,600 35,500 Common stock Retained earnings Dividends 6,800 Sales revenue 160,000 Interest revenue Cost of goods sold Salaries expense Rent expense Depreciation expense 84,000 20,300 12,400 Interest expense Supplies expense Insurance expense 2,500 Advertising expense 4,400 Totals 399,300 399,300 Information necessary to prepare the year-end adjusting entries appears below. 1. Depreciation on the office equipment for the year is $11,400. 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, 2021, were $1,450. 3. On October 1, 2021, Pastina borrowed $52,800 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, 2021, the company lent a supplier $22,800 and a note was signed requiring principal and interest at 8% to be paid on February 28, 2022. 5. On April 1, 2021, the company paid an insurance company $8,800 for a one-year fire insurance policy. The entire $8,800 was debited to prepaid insurance. 6. $890 of supplies remained on hand at December 31, 2021. 7. A customer paid Pastina $3,400 in December for 1,450 pounds of spaghetti to be delivered in January 2022. Pastina credited deferred sales revenue. 8. On December 1, 2021, $2,400 rent was paid to the owner of the building. The payment represented rent for December 2021 and January 2022 at $1,200 per month. The entire amount was debited to prepaid rent.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 19E: Rix Company sells home appliances and provides installation and service for its customers. On April...

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