Question - Adjusting Entries
Prepare the necessary adjusting entries at December 31, 2013 for the Pastina Company for each of the following situations. Assume that no financial statements were prepared during the year and no adjusting entries were recorded.
1. A customer paid Pastina $2,000 in December for 1,500 pounds of spaghetti to be manufactured and delivered in January 2014. Pastina credited Sales Revenue.
2. On April 1, 2013, the company paid an insurance company $6,000 for a two-year fire insurance policy. The entire $6,000 was debited to insurance expense.
3. On March 1, 2013, the company lent a supplier $20,000 and a note was signed requiring principal and interest at 8% to be paid on February 28, 2014.
4. $800 of supplies remained on hand at December 31, 2013 when the Supplies general ledger account had a balance of $1,500.
5. On December 1, 2013, $2,000 rent was paid to the owner of the building. The payment represented rent for December and January 2014 and was debited to Prepaid Rent
6. On October 1, 2013, 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.
7. On November 1, 2013, the company leased part of its fl0or for one year. Pastina received $6,000 representing the first six months' rent and credited unearned rent revenue.
8. Equipment having a cost of $75,000 and accumulated depreciation of $10,000 is being depreciated using the straight-line method over an eight-year useful life with no salvage value.
9. Accrued wages at year end should be $4,500
10. Customers owed the company $22,000 at year-end.