The post-closing trial balance as of December 31, 2021, appears below.

Account Title	Debits	Credits
Cash	$1,273,000
Accounts receivable	$0
Supplies	$1,000
Inventory	$70,000
Prepaid rent	$0
Equipment	$120,000
Accumulated depreciation-equipment		$20,000
Truck	$0
Accumulated depreciation-truck		$0
Salaries payable		$1,000
Notes payable		$50,000
Interest payable		$1,500
Deferred sales revenue		$0
Common stock		$1,320,000
Retained earnings		$71,500
Dividends	$0
Sales revenue		$0
Cost of goods sold	$0
Salaries expense	$0
Rent expense	$0
Depreciation expense	$0
Interest expense	$0
Supplies expense	$0
Totals	$1,464,000	$1,464,000

Pastina reported financial statements for 2021 based on the above table. They provide beginning balances of B/S accounts for 2022.

Following transactions occurred during 2022:

On Jan 1, 2022, Pastina sold $1,000,000 common stocks to investors.

For each months, employees' earned salaries are $1,000. Employee salaries are paid once a month on the 7th of the following month. On Jan 7, Pastina paid salary for December last year. Pastina makes a journal entry on the 7^th of every month.

On Mar 1, purchased $80,000 inventory in cash.

On April 1, purchased $5,000 supplies in cash

On April 1, purchased $50,000 truck in cash

On June 1, borrowed $100,000 from a local bank and signed a note. The note requires interest to be paid annually on May 30 at 12%. The principal is due in 10 years.

On July 1, sold $50,000 worth of inventory with 40% profit margin to a customer on account.

The $50,000 notes payable on the balance sheet is from October 1, 2021 (last year), when 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 2 years. At the end of last year, Pastina recognized interest expense and recorded interest payable for three months (Oct-Dec). On September 30, 2022, Pastina paid the annual interest to the bank.

On December 1, Pastina paid $36,000 rent to the owner of the building. The payment represents rent for three years starting December 2022.

On Dec 20, a customer paid Pastina $20,400 for products to be delivered in January 2023 and Pastina credited deferred sales revenue. The cost of inventory was $15,000. (hint: sales revenue and cost of goods sold are not recognized until the products are delivered. Inventory is not credited until delivery.)

On Dec 25, cash dividend of $10,000 was declared and paid.

1. Prepare the necessary journal entries for transactions in 2022.
2. Prepare the unadjusted trial balance table reflecting those transactions. Use the previous year’s data as beginning balances for b/s accounts.

Information necessary to prepare the 2022 year-end adjusting entries appears below.

Depreciation on the office equipment for the year is $5,000.

Depreciation on the truck for the year is $4,500.

Employee salaries $1,000 for December will be paid in January next year.

The entire rent $30,000 was debited to prepaid rent.

$1200 of supplies remained on hand at December 31, 2022

Partial-year interest expense and interest payable for the two notes payables need to be accounted for.

3. Prepare the necessary December 31, 2022, adjusting journal entries.
4. Prepare the adjusted trial balance table.
5. Make closing journal entries for 2022.
6. Prepare the post-closing adjusted trial balance table.

Answer rating: 100% (QA)

a Prepare the necessary December 31 2022 adjusting journal entries Accumulated DepreciationEquipment ... View the full answer