The information necessary for preparing the December 31, 2021 year-end adjusting entries for Vito's Pizza Parlor appears below. Vito's fiscal year-end is December-31.
The information necessary for preparing the December 31, 2021 year-end adjusting entries for Vito's Pizza Parlor appears below. Vito's fiscal year-end is December 31. a. On July 1, 2021, purchased $14,500 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 12%. b. Vito's depreciable equipment has a cost of $34,500, a five-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 $8,700 representing the first six months' rent and credited deferred rent revenue. d. On April 1, 2021, the company paid $3,480 for a two-year fire and liability insurance policy and debited insurance expense. e. On October 1, 2021, the company borrowed $29,000 from a local bank and signed a note. Principal and interest at 12% will be paid on September 30, 2022. f. At year-end, there is a $2,250 debit balance in the supplies (asset) account. Only $790 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 failed to record these adjusting entries. (Ignore income tax expense.) Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare the necessary adjusting journal entries at December 31, 2021. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations.) View transaction list Journal entry worksheet On July 1, 2021, purchased $14,500 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 12%. Note: Enter debits before credits. Transaction General Journal Debit Credit a. Record entry Clear entry View general journal Required 1 Required 2 Determine the amount by which net income would be misstated if Vito's failed 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.) Income Overstated (Understated) Adjustments to revenues: Adjustments to expenses:
