Prepare the necessary December 31, 2011, adjusting journal entries. Enter them into the worksheet using proper journal entry format.

• Prepare an adjusted trial balance.
• Prepare a multi-step income statement and a statement of shareholders' equity for the year ended December 31, 2011, and a classified balance sheet as of December 31, 2011. Assume that no common stock was issued during the year and that $4,000 in cash dividends were paid to shareholders during the year.
• Prepare closing entries.
• Prepare a post-closing trial balance.

Pastina Company manufactures and 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, 2011, appears below.

	Unadjusted Trail Balance
	December 31 2021
Account Title	Debit	Credit
Cash	$         30,000
Accounts Receivable	$         40,000
Allowance for uncollectible accounts		$       3,000
Supplies	$           1,500
Inventory	$         60,000
Notes Receivable	$         20,000
Interest receivable
Prepaid Rent	$           2,000
Prepaid Inurance
Equipment	$         80,000
Accumulated depreciation-equipment		$     30,000
Accounts payable		$     28,000
Wages payable
Notes payable		$     50,000
Interest payable
Unearned revenue
Common stock		$     60,000
Retained earnings		$     24,500
Sales Revenue		$   148,000
Interest revenue
Cost of good sold	$         70,000
Wages expense	$         18,900
Rent Expense	$         11,000
Depreciation expense
Interest expense
Supplies expense	$           1,100
Insurance expense	$           6,000
Bad debt expense	$           3,000
Totals	$       343,500	$   343,500

 

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

• Depreciation on the equipment for the year is $10,000.
• The company estimates that of the $40,000 in accounts receivable outstanding at year-end, $5,500 probably will not be collected.
• Employee wages are paid twice a month, on the 22nd for wages earned from the 1st through the 15th, and on the 7th of the following month for wages earned from the 16th through the end of the month. Wages earned from December 16 through December 31, 2011, were$1,500.
• On October 1, 2011, 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.
• On March 1, 2011, the company lent a supplier $20,000 and a note was signed requiring principal and interest at 8% to be paid on February 28, 2012.
• On April 1, 2011, the company paid an insurance company $6,000 for a two-year fire insurance policy. The entire $6,000 was debited to insurance expense.
• $800 of supplies remained on hand at December 31, 2011.
• A customer paid Pastina $2,000 in December for 1,500 pounds of spaghetti to be manufactured and delivered in January 2012. Pastina credited sales revenue.
• On December 1, 2011, $2,000 rent was paid to the owner of the building. The payment represented rent for December and January 2012, at $1,000 per month.