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 trial balance as of December 31, 2018, appears below.

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 journal entries.
 

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Account Title Deblts Credits Cash 30,000 Accounts receivable 40,000 Supplies Inventory 1,500 60,000 Note receivable 20,000 Interest receivable -0- Prepaid rent Prepaid insurance Office equipment Accumulated depreciation-office equipment Accounts payable Salaries and wages payable 2,000 -0- 80,000 30,000 31,000 -0- Note payable Interest payable Deferred revenue 50,000 -0- -0- Common stock 60,000 Retained earnings 24,500 Sales revenue 148,000 Interest revenue Cost of goods sold Salaries and wages expense Rent expense Depreciation expense Interest expense Supplies expense Insurance expense Advertising expense -0- 70,000 18,900 11,000 -0- -0- 1,100 6,000 3,000 Totals 343,500 343,500 Account Title Deblts Credits Cash 30,000 Accounts receivable 40,000 Supplies Inventory 1,500 60,000 Note receivable 20,000 Interest receivable -0- Prepaid rent Prepaid insurance Office equipment Accumulated depreciation-office equipment Accounts payable Salaries and wages payable 2,000 -0- 80,000 30,000 31,000 -0- Note payable Interest payable Deferred revenue 50,000 -0- -0- Common stock 60,000 Retained earnings 24,500 Sales revenue 148,000 Interest revenue Cost of goods sold Salaries and wages expense Rent expense Depreciation expense Interest expense Supplies expense Insurance expense Advertising expense -0- 70,000 18,900 11,000 -0- -0- 1,100 6,000 3,000 Totals 343,500 343,500

Answer rating: 100% (QA)

Solution Sl No Accounts Title Debit Credit 1 Depreciation Expenses 10000 Accumulated Depreciation 10... View the full answer