The following transactions summarize all activity for the year. Prepare the journal entry for each transaction on
Question:
The following transactions summarize all activity for the year. Prepare the journal entry for
each transaction on the Journal Entries tab of the Pasta Worksheet the first is done for you
You dont need to include explanations; just enter the account names and the amount each
account is debited or credited. Also post each journal entry to the respective taccounts.
Notes: Pasta combines several types of nonvendor payables eg taxes payable under the
heading Accrued Expenses. Similarly, the company combines several types of operating
expenses eg executive compensation, marketing, utilities under the heading General and
Administrative Expenses. The labor costs for restaurant workers are included in the heading
Restaurant Labor on the income statement while the compensation costs for all other
employees are included in the heading General and Administrative Expenses.
a Pasta & More issued new shares of common stock for $
b Inventory costing $ was purchased, all on account.
c Pasta & More had sales of $all in cash at the companyowned restaurants. The
cost of the food products sold at the companyowned cafes was $
d The company earned royalties and fees from franchisees of $ all on account.
e Pasta & More paid down longterm debt in the amount of $ with cash.
f
Property and equipment in the amount of $ was purchased. Pasta & More paid
$ in cash and signed a promissory note due in months for $
g Pasta & More received $ cash from franchisees as payment for amounts previously
owed.
h Pasta & More s paid $ in cash for advertising and administrative costs incurred
during the year. In addition, wages for restaurant employees was $ in all paid
in cash.
i
j
Pasta & More compensated certain high level executives who worked for the company in
by issuing new shares of Pasta & More stock worth $ie Pasta gave them
shares of the company instead of giving them a paycheck for services provided during the
year
Pasta & More paid cash for preopening costs eg site selection, training of $
In addition, late in the fiscal year, the company paid cash of $ for rental deposits for
locations that it did not occupy until
k The company incurred $ in interest expense for which was fully paid in cash.
l
Customers bought gift certificates for $ during All of these purchases were
made in cash. The gift certificates will be used by customers during
m Pasta & More paid vendors $ cash owed for previously delivered supplies.
n Pasta & More recognized depreciation expense of $ For purposes of this case,
depreciation expense reduces property and equipment, net. Next week, we will discuss a
separate account called accumulated depreciation.
o Pasta & More reported income tax expense of $ for Of this amount, the
company made estimated cash payments to the IRS during the year of $ and still owed
the balance of $ at year end.
Prepare the trial balance as of December under the Trial Balance tab using the ending
balances in the taccounts. I have started the trial balance by giving you the correct ending
balance in the cash account.
Prepare the Income Statement, Statement of Retained Earnings and Balance Sheet.
Prepare the journal entry to close out the revenue and expense accounts to retained earnings.
Financial Reporting and Analysis
ISBN: 978-0078025679
6th edition
Authors: Flawrence Revsine, Daniel Collins, Bruce, Mittelstaedt, Leon