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Pastina Company sells various types of pasta to grocery chains as private label brands. The companys reporting year-end is December 31. The unadjusted trial balance as of December 31, 2021, appears below.

Account Title	Debits	Credits
Cash	30,000
Accounts receivable	40,000
Supplies	1,500
Inventory	60,000
Notes receivable	20,000
Interest receivable	0
Prepaid rent	2,000
Prepaid insurance	6,000
Office equipment	80,000
Accumulated depreciation		30,000
Accounts payable		31,000
Salaries payable		0
Notes payable		50,000
Interest payable		0
Deferred sales revenue		2,000
Common stock		60,000
Retained earnings		28,500
Dividends	4,000
Sales revenue		146,000
Interest revenue		0
Cost of goods sold	70,000
Salaries expense	18,900
Rent expense	11,000
Depreciation expense	0
Interest expense	0
Supplies expense	1,100
Insurance expense	0
Advertising expense	3,000
Totals	347,500	347,500

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

1. Depreciation on the office equipment for the year is $10,000.

2. Employee salaries are paid twice a month, on the 22nd for salaries earned from the 1st through the 15th, and on the 7th of the following month for salaries earned from the 16th through the end of the month. Salaries earned from December 16 through December 31, 2021, were $1,500.

3. On October 1, 2021, 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.

4. On March 1, 2021, the company lent a supplier $20,000, and a note was signed requiring principal and interest at 8% to be paid on February 28, 2022.

5. On April 1, 2021, the company paid an insurance company $6,000 for a one-year fire insurance policy. The entire $6,000 was debited to prepaid insurance.

6. $800 of supplies remained on hand at December 31, 2021.

7. A customer paid Pastina $2,000 in December for 1,500 pounds of spaghetti to be delivered in January 2022. Pastina credited deferred sales revenue.

8. On December 1, 2021, $2,000 rent was paid to the owner of the building. The payment represented rent for December 2021 and January 2022 at $1,000 per month. The entire amount was debited to prepaid rent.

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1. Enter the unadjusted balances from the trial balance into T-accounts.

2. Post the adjusting entries prepared in P 23 to the accounts.

3. Prepare an adjusted trial balance.

4. 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 $4,000 in cash dividends were paid to shareholders during the year.

5. Prepare closing entries and post to the accounts.

6. Prepare a post-closing trial balance.

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