Q1 A company has a fiscal year-end of December 31: (1) on October 1, $12,000 was paid for a one-year fire insurance policy; (2) on June 30 the company loaned its chief financial officer $10,000; principal and interest at 6% on the note are due in one year; and (3) equipment costing $60,000 was purchased at the beginning of the year for cash. Depreciation on the equipment is $12,000 per year.

If the adjusting entries were not recorded, would net income be higher or lower and by how much?

Q2 The following transactions occurred during March 2024 for the Right Corporation. The company operates a wholesale warehouse.

1. Issued 30,000 shares of no-par common stock in exchange for $300,000 in cash.
2. Purchased equipment at a cost of $40,000. Cash of $10,000 was paid and a note payable to the seller was signed for the balance owed.
3. Purchased inventory on account at a cost of $90,000. The company uses the perpetual inventory system.
4. Credit sales for the month totaled $120,000. The cost of the goods sold was $70,000.
5. Paid $5,000 in rent on the warehouse building for the month of March.
6. Paid $6,000 to an insurance company for fire and liability insurance for a one-year period beginning April 1, 2024.
7. Paid $70,000 on account for the inventory purchased in transaction 3.
8. Collected $55,000 from customers on account.
9. Recorded depreciation expense of $1,000 for the month on the equipment.

Required:

Analyze each transaction and show the effect of each on the expanded accounting equation for a corporation.