Manning Manufacturing Inc. had the following items that require adjustment at year end.

a. Salaries of $5,320 that were earned in December are unrecorded and unpaid.

b. Used $1,970 of utilities in December, which are unrecorded and unpaid.

c. Interest of $925 on a note payable has not been recorded or paid.

Required:

1. Prepare the adjusting entries needed at December 31.

2. What is the effect on the ?nancial statements if these adjusting entries are not made?