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Expense Adjustments Conceptual Connection: What would be the effect on expenses if the adjusting entries were not made? a . Expenses would be understated and

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
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