On February $1,$ Powell Company paid $$8,700$ for one year of advertising in advance. Powell debited Prepaid Advertising. The advertising expense will be used evenly throughout the year. If the appropriate adjusting entry is not made at the end of the year, what will be the effect on:

$($a$)$ Income statement accounts $($overstated$,$ understated, or no effect$)?$

$($b$)$ Net income $($overstated$,$ understated, or no effect$)?$

$($c$)$ Balance sheet accounts $($overstated$,$ understated, or no effect$)?$

Income Statement Accounts

Revenue:

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Expense:

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Net Income:

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Balance Sheet Accounts

Assets:

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Liabilities:

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Retained Earnings:

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