3. Prepaid InsuranceAnnual Adjustments On April 1, 2014, Briggs Corp. purchases a 24-month property insurance policy for $50,400. The policy is effective immediately. Assume that Briggs prepares adjustments only once a year, on December 31. Required: 1. Compute the monthly cost of the insurance policy. $ _________________ per month 2. Identify and analyze the transaction to record the purchase of the policy on April 1, 2014. Activity _________________ Accounts _________________ Statement(s) _________________ How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Balance Sheet Income Statement Assets = Liabilities + Stockholders' Equity Revenues Expenses = Net Income _________________ _________________ _________________ _________________ _________________ _________________ _________________ _________________ _________________ _________________ _________________ _________________ _________________ _________________ _________________ _________________ _________________ _________________ _________________ _________________ 3. Identify and analyze the adjustment on December 31, 2014. Activity _________________ Accounts _________________ Statement(s) _________________ How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Balance Sheet Income Statement Assets = Liabilities + Stockholders' Equity Revenues Expenses = Net Income _________________ _________________ _________________ _________________ _________________ _________________ _________________ _________________ _________________ _________________ 4. Assume that the accountant forgets to record an adjustment on December 31, 2014. Will net income for the year ended December 31, 2014, be understated or overstated? _________________ 4. Concert Tickets Sold in Advance Rock N Roll produces an outdoor concert festival that runs from June 28, 2014, through July 1, 2014. Concertgoers pay $80 for a four-day pass to the festival, and all 35,000 tickets are sold out by the May 1, 2014, deadline to buy tickets. Assume that Rock N Roll prepares adjustments at the end of each month. Required: 1. Identify and analyze the transaction on May 1, 2014, assuming that all 35,000 tickets are sold on this date. Activity _________________ Accounts _________________ Statement(s) _________________ How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Balance Sheet Income Statement Assets = Liabilities + Stockholders' Equity Revenues Expenses = Net Income _________________ _________________ _________________ _________________ _________________ _________________ _________________ _________________ _________________ _________________ 2. Identify and analyze the adjustment on June 30, 2014. Activity _________________ Accounts _________________ Statement(s) _________________ How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Balance Sheet Income Statement Assets = Liabilities + Stockholders' Equity Revenues Expenses = Net Income _________________ _________________ _________________ _________________ _________________ _________________ _________________ _________________ _________________ _________________ 3. Identify and analyze the adjustment on July 31, 2014. Activity _________________ Accounts _________________ Statement(s) _________________ How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Balance Sheet Income Statement Assets = Liabilities + Stockholders' Equity Revenues Expenses = Net Income _________________ _________________ _________________ _________________ _________________ _________________ _________________ _________________ _________________ _________________