Reference no: EM132999704

Question - Buzzard Bicycle specializes in custom painting and design of bicycles. December 31 is the company's fiscal year-end. Information necessary to prepare the year-end adjusting entries appears below.

-A three-year fire insurance policy was purchased on July 1, 2021, for $22,200. The company debited Prepaid Insurance for the entire amount.

-Employee salaries of $27,800 for the month of December will be paid in early January.

-On November 1, 2021, the company received $10,200 in cash from a customer requesting a custom design for six identical bikes ($1,700 each). Deferred Revenue was credited for the entire amount. By the end of the year, four of the bikes have been completed.

-Supplies at the beginning of the year totaled $4,800. During 2021, additional supplies of $20,800 were purchased, and the entire amount was debited to Supplies. Supplies remaining at the end of the year total $6,800.

-Buzzard paid a local radio station $14,800 for four months of advertising on December 1, 2021. The advertising will appear evenly over the four-month period. The company debited Prepaid Advertising for the entire amount.

-Buzzard borrowed $40,200 on March 1, 2021. The principal is due to be paid in five years. Interest is payable each March 1 at an annual rate of 10%.