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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 Faraday paid Wausau Insurance $ for its liability insurance for the next months. The full amount of the
prepayment was debited to prepaid insurance.
b At December Faraday estimates that $ of utility costs are unrecorded and unpaid.
c Faraday rents its testing equipment from JVC Equipment rent in the amount of $ is unpaid and unrecorded at December
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 $ for months' sponsorshipNovember, December, and Januaryin advance. When these
payments were made, Faraday debited prepaid advertising. At December months' advertising has been used and month
remains unused.
Required:
Prepare adjusting entries at December for these four activities. If an amount box does not require an entry, leave it blank.
Dec. Insurance Expense
Dec.
Utilities Payable
Dec.
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