roblem 2-7 (Algo) Adjusting entries and income effects [LO2-5, 2-6] The information necessary for preparing the December 31, 2021 year-end adjusting entries for Vito's Pizza. Parlor appears below. Vito's iscal year-end is December 31 . a. On July 1, 2021, purchased $12,000 of IBM Corporation bonds at face value. The bonds pay interest twice a year on January 1 and July 1. The annual interest rate is 11%. b. Vito's depreciable equipment has a cost of $38,400, a six-year life, and no salvage value. The equipment was purchased in 2019. The straight-line depreciation method is used. c. On November 1. 2021, the bar area was leased to Jack Donaldson for one year. Vito's received $7,200 representing the first six. months' rent and credited deferred rent revenue. d. On April1, 2021, the company paid \$2,880 for a two-year fire and lability insurance phlicy and debited insurance expense. e. On October 1, 2021, the company borrowed $24,000 from a local bank and signed a note. Principal and interest at 11$ will be paid on September 30, 2022. t. At year-end, there is a $2,000 debit balance in the supplies (asset) account. Only $740 of supplies remain on hand. Required: 1. Prepare the necessary adjusting journal entries at December 31,2021 . 2. Determine the amount by which net income would be misstated if Vito's falled to record these adjusting entries. (ignore income tax expense.) Complete this question by entering your answers in the tabs below. Prepare the necessary adjusting journal entries at December 31 , 2021. (If no entry is required for a transaction/event, select entry required" in the first account field. Do not round intermediate calculations.) Journal entry worksheet 256 On July 1,2021 , purchased $12,000 of IBM Corporation bonds at face value. The bonds pay interest twice a year on January 1 and July 1 . The annual. interest rate is 11%. Woth Encer detis betge credits Required: 1. Prepare the necessary adjusting journal entries at December 31,2021. 2. Determine the amount by which net income would be misstated if Vito's falled to record these adjusting entries. (lgnore income tax expense.) Complete this question by entering your answers in the tabs below. Determine the amount by which net income would be misstated if Vito's falled to record these adjusting entries. (Ignore income tax expense.) (Amounts to be deducted should be indicated by a minus sign. Do not round intermediate calculations.)