Example similar to P3-4A Record adjusting entries

Venture North 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 six-year fire insurance policy was purchased on July 1, 2022, for $18,000. The company
debited Prepaid Insurance for the entire amount.
2. Employee salaries of $15,000 for the month of December will be paid in early January.
3. On November 1, 2022, 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. By the end of the year, five of the bikes have been completed.
4. Supplies at the beginning of the year totaled $3,000. During 2022, additional supplies of
$20,000 were purchased, and the entire amount was debited to Supplies. Supplies
remaining at the end of the year total $6,000.
5. Venture North paid a local radio station $2,000 for five months of advertising on December 1,
2022. The advertising will appear evenly over the Five-month period. The company debited
Prepaid Advertising for the entire amount.
6. Venture North borrowed $30,000 on March 1, 2022. The principal is due to be collected in five
years. Interest is paid each March 1 at an annual rate of 12%.
Required:
Record the necessary adjusting entries on December 31, 2022. (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.)

Date General Journal Debit Credit

1 December 31 Insurance Expense 1,500
Prepaid Insurance 1,500
18,000/(6x12) x 6 15,000
2 December 31 Salary Expense 15,000
Salary Payable 15,000

3 December 31 Deferred Revenue 10,000

Service Revenue 10,000
12,000/6x5
4 December 31 Supplies Expense 17,000
Supplies 17,000
3,000+20,000-6,000=17,000
5 December 31 Advertising Expense 400
Prepaid Advertising 2,000 / 5 x 1 400

6 December 31 Interest Expense 3,000

Interest Payable 30,000 x .12 x 10/12 3,000