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 Debits Credits

Cash $ $32,300$

Accounts receivable $40,800$

Supplies $1,900$

Inventory $60,800$

Notes receivable $20,800$

Interest receivable $0$

Prepaid rent $1,300$

Prepaid insurance $6,800$

Office equipment $83,200$

Accumulated depreciation $ $31,200$

Accounts payable $31,800$

Salaries payable $0$

Notes payable $50,800$

Interest payable $0$

Deferred sales revenue $2,400$

Common stock $65,600$

Retained earnings $30,500$

Dividends $4,800$

Sales revenue $150,000$

Interest revenue $0$

Cost of goods sold $74,000$

Salaries expense $19,300$

Rent expense $11,400$

Depreciation expense $0$

Interest expense $0$

Supplies expense $1,500$

Insurance expense $0$

Advertising expense $3,400$

Totals $ $362,300$ $ $362,300$

Information necessary to prepare the year$-$end adjusting entries appears below.

Depreciation on the office equipment for the year is $$10,400.$

Employee salaries are paid twice a month, on the $22$nd for salaries earned from the $1$st through the $15$th$,$ and on the $7$th of the following month for salaries earned from the $16$th through the end of the month. Salaries earned from December $16$ through December $31,2024,$ were $$950.$

On October $1,2024,$ Pastina borrowed $$50,800$ 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.

On March $1,2024,$ the company lent a supplier $$20,800,$ and a note was signed requiring principal and interest at $8\%$ to be paid on February $28,2025.$

On April $1,2024,$ the company paid an insurance company $$6,800$ for a one$-$year fire insurance policy. The entire $$6,800$ was debited to prepaid insurance at the time of the payment.

$$590$ of supplies remained on hand on December $31,2024.$

The company received $$2,400$ from a customer in December for $950$ pounds of spaghetti to be delivered in January $2025.$ Pastina credited deferred sales revenue at the time cash was received.

On December $1,2024,$ $$1,300$ rent was paid to the owner of the building. The payment represented rent for December $2024$ and January $2025$ at $$650$ per month. The entire amount was debited to prepaid rent at the time of the payment.

Problem $2-4($Algo$)$

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 $$4,800$ 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 during the year and that $$4,800$ in cash dividends were paid to shareholders during the year.

$4-$c$.$ Prepare a classified balance sheet as of December $31,2024.$ Assume that no common stock was issued during the year and that $$4,800$ in cash dividends were paid to shareholders during the year.

$5.$ Prepare closing entries and post to the T$-$accounts $($on the T$-$accounts tab$).$

$6.$ Prepare a post$-$closing trial balance.

Answer rating: 100% (QA)

TAccounts Cash Unadjusted balance 32300 Adjusting entries None Adjusted balance 32300 Accounts Receivable Unadjusted balance 40800 Adjusting entries None Adjusted balance 40800 Supplies Unadjusted bal... View the full answer