Expense Adjustments Conceptual Connection: What would be the effect on expenses if the adjusting entries were not made?

a$.$ Expenses would be understated and assets would be overstated, net income and stockholders' equity would be

b$.$ Expenses would be understated and liabilities would be understated, net income and stockholders' equity wou

c$.$ Expenses would be understated and liabilities would be understated, net income and stockholders' equity wou

d$.$ Expenses would be understated and assets would be overstated, net income and stockholders' equity would be

Cumulative effect on expenses:

Faraday Electronic Service repairs stereos and DVD players. During the year, Faraday engaged in the following activities:

a$.$ On September $1,$ Faraday paid Wausau Insurance $$5,160$ for its liability insurance for the next $12$ months. The full amount of the

prepayment was debited to prepaid insurance.

b$.$ At December $31,$ Faraday estimates that $$1,800$ of utility costs are unrecorded and unpaid.

c$.$ Faraday rents its testing equipment from JVC$.$ Equipment rent in the amount of $$2,430$ is unpaid and unrecorded at December $31.$

d$.$ In late October, Faraday agreed to become the sponsor for the sports segment of the evening news program on a local television

station. The station billed Faraday $$6,900$ for $3$ months' sponsorship$-$November, December, and January$-$in advance. When these

payments were made, Faraday debited prepaid advertising. At December $31,2$ months' advertising has been used and $1$ month

remains unused.

Required:

Prepare adjusting entries at December $31$ for these four activities. If an amount box does not require an entry, leave it blank.

Dec. $31$ Insurance Expense $$

Dec. $31$

Utilities Payable

$x$

$$

$$

$$

$x$

Dec. $31$

$$

$$

$$

$$

$$