Reference no: EM132381747

Question

Pastina Company 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, 2018, appears below.

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

1. Depreciation on the office equipment for the year is $12,000.

2. Employee salaries and wages are paid twice a month, on the 22nd for salaries and wages earned from the 1st through the 15th, and on the 7th of the following month for salaries and wages earned from the 16th through the end of the month. Salaries and wages earned from December 16 through December 31, 2018, were $6,200.

3. On October 1, 2018, Pastina borrowed $90,000 from a bank and signed a note. The note requires interest to be paid annually on September 30 at 4%. The term is 5 years.

4. On April 1, 2018, the company lent a supplier $52,000 and a note was signed requiring principal and interest at 10% to be paid on February 28, 2019.

5. On April 1, 2018, the company paid an insurance company $16,000 for a two-year fire insurance policy. The entire $16,000 was debited to insurance expense.

6. $1,250 of supplies remained on hand at December 31, 2018.

7. A customer paid Pastina $7,500 in December for 1,500 pounds of spaghetti to be delivered in January 2019. Pastina credited sales revenue.

8. On December 1, 2018, $8,400 rent was paid to the owner of the building. The payment represented rent for December 2018 through March 2019 and was debited to prepaid rent.

Required:

1. Set up an Excel file and prepare the Unadjusted Trial Balance in the first worksheet.

2. Prepare the necessary December 31, 2018, adjusting journal entries in the next worksheet.

3. Enter the unadjusted balances from the trial balance into a 10 column worksheet, and post the adjusting entries prepared from the above data to the worksheet. Present the correct balances for all columns in the worksheet.

4. Prepare adjusted trial balance, displayed in another worksheet.

5. Prepare income statement and a statement of shareholders' equity for the year ended December 31, 2018, and a classified balance sheet as of December 31, 2018. Assume that no common stock was issued during the year and that $4,500 in cash dividends were paid to shareholders during the year.

6. Prepare closing entries.

7. Prepare post-closing trial balance.