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.

 

1. A three-year fire insurance policy was purchased on July 1, 2024, for $24,000. The company debited Prepaid Insurance for the entire amount on July 1. 2. Employee salaries of $29,000 for the month of December will be paid in early January. 3. On November 1, 2024, the company received $12,000 in cash from a customer requesting a custom design for six identical bikes ($2,000 each). Deferred Revenue was credited for the entire amount on November 1. By the end of the year, four of the bikes have been completed. 4. Supplies at the beginning of the year totaled $6,000. During 2024, additional supplies of $22,000 were purchased, and the entire amount was debited to Supplies at the time of purchase. Supplies remaining at the end of the year total $8,000. 5. Hometowne paid a local radio station $16,000 for four months of advertising on December 1, 2024. The advertising will appear evenly over the four-month period. The company debited Prepaid Advertising for the entire amount on December 1. 6. Hometowne borrowed $42,000 on March 1, 2024. The principal is due to be paid in five years. Interest is payable each March 1 at an annual rate of 10%. Required: Record the necessary adjusting entries on December 31, 2024. (Do not round intermediate calculations. If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.) Answer is complete but not entirely correct. General Journal Debit Credit 3,850 3,850 No Date 1 December 31 Insurance Expense Prepaid Insurance 2 December 31 Salaries Expense Salaries Payable 3 December 31 Deferred Revenue Service Revenue 28,400 28,400x 7,400 7,400 4 December 31 Salaries Expense Supplies 19,400 19,400 5 December 31 Advertising Expense 3,850 Prepaid Advertising 3,850 6 December 31 Interest Expense Interest Pavahle 3,425 3.425