Concept explainers
• LO2–5
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
Account Title | Debits | Credits |
Cash | 30,000 | |
40,000 | ||
Supplies | 1,500 | |
Inventory | 60,000 | |
Note receivable | 20,000 | |
Interest receivable | –0– | |
Prepaid rent | 2,000 | |
Prepaid insurance | –0– | |
Office equipment | 80,000 | |
Accumulated |
30,000 | |
Accounts payable | 31,000 | |
Salaries and wages payable | –0– | |
Note payable | 50,000 | |
Interest payable | –0– | |
Deferred revenue | –0– | |
Common stock | 60,000 | |
24,500 | ||
Sales revenue | 148,000 | |
Interest revenue | –0– | |
Cost of goods sold | 70,000 | |
Salaries and wages expense | 18,900 | |
Rent expense | 11,000 | |
Depreciation expense | –0– | |
Interest expense | –0– | |
Supplies expense | 1,100 | |
Insurance expense | 6,000 | |
Advertising expense | 3,000 | |
Totals | 343,500 | 343,500 |
Information necessary to prepare the year-end adjusting entries appears below.
1. Depreciation on the office equipment for the year is $10,000.
2. 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 $1,500.
3. On October 1, 2018, 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.
4. On March 1, 2018, the company lent a supplier $20,000 and a note was signed requiring principal and interest at 8% to be paid on February 28, 2019.
5. On April 1, 2018, the company paid an insurance company $6,000 for a two-year fire insurance policy. The entire $6,000 was debited to insurance expense.
6. $800 of supplies remained on hand at December 31, 2018.
7. A customer paid Pastina $2,000 in December for 1,500 pounds of spaghetti to be delivered in January 2019. Pastina credited sales revenue.
8. On December 1, 2018, $2,000 rent was paid to the owner of the building. The payment represented rent for December 2018 and January 2019 at $1,000 per month.
Required:
Prepare the necessary December 31, 2018, adjusting
Want to see the full answer?
Check out a sample textbook solutionChapter 2 Solutions
Intermediate Accounting
- block 3/2018 1.Even after the stipulated warranty period has expired, a coffee machine manufacturer responds to customer complaints and repairs faulty coffee machines. For this reason, provisions of €494 thousand were made in the HGB balance sheet in t1. At t2, based on past experience and sales of coffee machines at t2, you estimate that you will have future liabilities (cost for repairs) of €453k.1) Analyze whether int2 should be entered as a provision on the balance sheet.2) How to book t2?arrow_forwardQ# 2 Pass the adjusting entries from the following data the year ended on Dec 2019.i. Prepaid insurance account has a debit balance of Rs. 17,200 actual prepaid at the end is Rs. 6,200ii. Unpaid commission Rs. 3,560iii. Mark-up receivable on Notes Receivable Rs. 270iv. Rent payable for the month Rs. 4,500v. Outstanding electric expenses Rs. 2,850vi. Supplies inventory account balance Rs. 13,500 at the end supplies consumed Rs. 11,200vii. Advertising supplies Rs. 15,000 out of which advertising supplies consumed 9,950viii. Mark-up expenses on Notes Payable Rs. 55 not paid.arrow_forwardRequired information Exercise 5-19 (Algo) Prepaid expenses—insurance LO 10 Skip to question [The following information applies to the questions displayed below.] A company makes the payment of a one-year insurance premium of $4,440 on March 1, 2019. Exercise 5-19 (Algo) Part e e. Accounting for prepaid expenses achieves a better matching of revenues and expenses and yields a more meaningful measure of net income. true or falsearrow_forward
- Ex5.22The following transactions of Larson Services Inc. occurred during August 2019, its first month ofoperations.Aug. 1 Issued common stock for $3,000 cash1 Borrowed $10,000 cash from the bank1 Paid $8,000 cash for a used truck4 Paid $600 for a one–year truck insurance policy effective August 1 (record as an asset)5 Collected $2,000 fees from a client for work to be performed at a later date7 Billed a client $5,000 for services performed today9 Paid $250 for supplies purchased and used today12 Purchased $500 of supplies on credit (record as an asset)15 Collected $1,000 of the amount billed August 716 Paid $200 for advertising in The News during the first two weeks of August20 Paid $250 of the amount owing for supplies purchased on August 1225 Paid the following expenses: rent for August, $350; salaries,$2,150; telephone, $50; truck operating, $25028 Called clients about payment of the balances owing from August 729 Billed a client $6,000 for services performed today, including $1,500…arrow_forwardExercise 5-11 (Algo) Bad debts analysis—Allowance account LO 5 On January 1, 2019, the balance in Tabor Co.'s Allowance for Bad Debts account was $13,090. During the first 11 months of the year, bad debts expense of $21,062 was recognized. The balance in the Allowance for Bad Debts account at November 30, 2019, was $9,927. Required: a. What was the total of accounts written off during the first 11 months? (Hint: Make a T-account for the Allowance for Bad Debts account.) b. As the result of a comprehensive analysis, it is determined that the December 31, 2019, balance of the Allowance for Bad Debts account should be $9,341. Show the adjustment required in the journal entry format. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) c. During a conversation with the credit manager, one of Tabor's sales representatives learns that a $1,272 receivable from a bankrupt customer has not been written off but was…arrow_forwardPls only do part D Question 3. AGM Accounting received an invoice dated Jun 4th. The invoice is for office equipment and the supplier charged AGM $14,000 less 30%, with terms 4/15, n/45, ROG. The furniture arrives on Jul 10th.a) What date is the cash discount valid until?b) How much will AGM have to pay if it takes advantage of the cash discount?c) What date is the credit period valid until?d) Suppose AGM sends a $7,000 cheque for partial payment on Jul 17th. How much does AGM still owe after this payment? Assume the cash discount period has passed and we are still within the credit period.arrow_forward
- PA5. LO 8.5Inner Resources Company started its business on April 1, 2019. The following transactions occurred during the month of April. Prepare the journal entries in the journal on Page 1. The owners invested $8,500 from their personal account to the business account. Paid rent $650 with check #101. Initiated a petty cash fund $550 check #102. Received $750 cash for services rendered. Purchased office supplies for $180 with check #103. Purchased computer equipment $8,500, paid $1,600 with check #104 and will pay the remainder in 30 days. Received $1,200 cash for services rendered. Paid wages $560, check #105. Petty cash reimbursement office supplies $200, Maintenance Expense $140, Miscellaneous Expense $65. Cash on Hand $93. Check #106. Increased Petty Cash by $100, check #107.arrow_forwardPart B ( 7 marks) (Note this question IS related to Part A) SuperElectronics Limited Adjusted Trial Balance As at 30 June 2020 Debit Credit $ $ Cash 87,000 Accounts receivable 89,000 Allowance for Doubtful debts 4,300 Supplies 4,000 Plant & Equipment 218,000 Accumulated depreciation 64,000 Accounts Payable 38,000 Wages Payable 11,500 Loan payable ( not due until 2025) 50,000 Share capital 100,000 Retained Earnings 105,250 Dividends paid 10,000 Sales Revenue 368,000 Interest revenue 1,120 Doubtful debts expense 2,460 Depreciation expense 19,680 Rent & utilities expense 19,230 Wages and Salaries expense 281,000 Advertising expense 9,300 Interest expense 2,500 Totals 742,170 742,170 Required Prepare the Statement of Financial Position ( Balance…arrow_forwardRequired information Exercise 5-19 (Algo) Prepaid expenses—insurance LO 10 Skip to question [The following information applies to the questions displayed below.] A company makes the payment of a one-year insurance premium of $4,440 on March 1, 2019. Exercise 5-19 (Algo) Part d d. If the premium had been $8,880 for a two-year period, how should the prepaid amount at December 31, 2019, be reported on the balance sheet?arrow_forward
- 4.5.6 PLEASE ANSWER QUICK WITH NO EXPLANATION JUST THE ANSWERS!!! a)The Fisher Company paid $42,000 in cash to its landlord on September 1, 2023 for rent covering the six-month period from September 1, 2023 to February 29, 2024. The accounting records are not regularized until the end of the year. Which of the following statements does not correctly describe the effect of the December 31, 2023 adjusting entry on the financial statements of Fisher Company? Rent charge will increase by $28,000. Prepaid rent will decrease by $28,000. Net income will decrease by $28,000. The share capital will increase by $28,000. b)On January 1, 2023, Sentilla Company's general ledger includes supplies worth $800. During the year 2023, purchases of supplies amounted to $2,000. A physical inventory of inventory on hand as of December 31, 2023 determined that the amount of supplies on hand was $2,400. How much is the supply charge for the year 2023? 3600 2800 800 400 c)On May 1, 2024, Riverside…arrow_forwardPROBLEM 3 (MODIFIED) Seed Enterprise gathered the following information from its accounting records for the year ended December 31, 2020, prior to adjustments: Net credit sales for the year Php 680,000 Accounts receivable at December 31, 2020 92,000 Allowance for uncollectible accounts at December 31, 2020 1,850 Debit Seed uses the allowance method of accounting for uncollectible accounts and estimates uncollectible account expense at 2% of net credit sales. REQUIRED: Prepare the adjusting entry to record uncollectible account expense on December 31, 2020. Determine the balance in allowance for uncollectible accounts after the adjusting entry is prepared. Show how the receivables would be reported on the December 31, 2020 balance sheet for Seed Enterprise.arrow_forwardRequired information Exercise 5-19 (Algo) Prepaid expenses—insurance LO 10 Skip to question [The following information applies to the questions displayed below.] A company makes the payment of a one-year insurance premium of $4,440 on March 1, 2019. Exercise 5-19 (Algo) Part b (2) b-2. Prepare the adjusting entry that will be made at the end of every month to show the amount of insurance premium "used" that month. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)arrow_forward
- Financial & Managerial AccountingAccountingISBN:9781337119207Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage LearningCorporate Financial AccountingAccountingISBN:9781305653535Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage LearningCorporate Financial AccountingAccountingISBN:9781337398169Author:Carl Warren, Jeff JonesPublisher:Cengage Learning