Expense Adjustments

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

On September $1,$ Faraday paid Wausau Insurance $$7,080$ for its liability insurance for the next $12$ months. The full amount of the prepayment was debited to prepaid insurance.

At December $31,$ Faraday estimates that $$1,750$ of utility costs are unrecorded and unpaid.

Faraday rents its testing equipment from JVC$.$ Equipment rent in the amount of $$3,180$ is unpaid and unrecorded at December $31.$

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 $$4,800$ for $3$ months' sponsorship$$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:

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$1.$ Prepare adjusting entries at December $31$ for these four activities. If an amount box does not require an entry, leave it blank.

Dec. $31$

Dec. $31$

Dec. $31$

Dec. $31$

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$2.$ Conceptual Connection: What would be the effect on expenses if the adjusting entries were not made?

a$.$

b$.$

c$.$

d$.$

Cumulative effect on expenses:

by $fill in the blank $0$c$7$e$4$ff$3704$afc$8\_6$