Pastina Company sells varlous types of pasta to grocery chains as private label brands. The company's reporting year-end Is December 31. The unadjusted trlal balance as of December 31, 2021, appears below. Account Title Debits Credits
Cash 32,600
Accounts receivable 41,000
Supplies 2.000
Inventory 61,000
Notes receivable 21,000
Interest receivable 0
Prepaid rent 1.400
Prepaid insurance 7,000
Office equipment 84,000
Accumulated depreciation 31,500
Accounts payable 32,000
Salaries payable 0
Notes payable 51,000
Interest payable 2,500
Deferred sales revenue 67,000
Comon stock 31,000
Retained earnings 5,000
Dividends 151,000
Sales revenue 0
Interest revenue 75,000
Cost of goods sold 19,400
Salaries expenser
Rent expense 11.500
Depreciation expense 0
Interest expenses 0
Supplies expense 1,600
Insurance expense 0
Advertising expense 3,500
Totals 366,000 366,000
Information necessary to prepare the year-end adjusting entries appears below.
A. Depreclation on the office equipment for the year is $10,500.
B. Employee salarles are pald twice a month, on the 22nd for salarles earned from the 1st through the 15th, and on the 7th of the following month for salarles earned from the 16th through the end of the month. Salarles eaned from December 16 through December 31, 2021, were $1,000
C. On October 1, 2021, Pastina borrowed $51,000 from a local bank and signed a note. The note requlres interest to be pald annually on September 30 at 12%. The principal Is due In 10 years.
D. On March 1, 2021, the company lent a suppler $21,000 and a note was slgned requiring principal and Interest at 8% to be pald on February 28, 2022
E. On April 1, 2021, the company pald an Insurance company $7000 for a two-year fire Insurance policy. The entire $7,000 was debited to prepaid Insurance
F. $620 of supplies remalned on hand at December 31, 2021.
G. A customer pald Pastina $2,500 In December for 1,000 pounds of spaghettl to be dellvered in January 2022 Pastina credited deferred sales revenue.
H. On December 1, 2021, $1,400 rent was pald to the owner of the bullding. The payment represented rent for December 2021 and January 2022 at $700 per month. The entire amount was deblted to prepaid rent.
Prepare an income statement and a statement of shareholders’ equity for the year ended December 31, 2021, and a classified balance sheet as of December 31, 2021. Assume that no common stock was issued during the year and that $5,000 in cash dividends were paid to shareholders during the year.