Reynolds Computer Service offers data processing services to retail clothing stores. The following data have been collected to aid in the preparation of adjusting entries for Reynolds Computer Service for the current year: a. Computer equipment was purchased from IBM 3 years ago at a cost of $540,000. Arinual deprociation is $128,300 b. A fire insurance policy for a 2-year period beginning on September 1 was purchased from Good Hands insurance Company for $9,000 cash. The entire amount of the prepsyment was debited to prepaid insurance. (Assume that the beginning balance of prepaid insurance was $0 and that there were no other debits or credits to that account during the year.) c. Reynolds has a contract to perform the payroll accounting for Dayton's Department Stores. On December 31 , $5,860 of services have been performed under this contract but are unbilled. d. Reynolds rents 12 computer terminals for $65 per month per terminal from Extreme Terminals Inc. At December 31 , Revooids owes Extreme Terminals for half a menth's rent on each terminal. The amount owed is unrecorded. e. Perry's Tax Service prepays rent for time on Reynolds' computer. When payments are received from Perry's Tax Service, Reynolds credits unearned rent: revenue. At December 31 , Reynolds has earned $1,860 for computer time used by Perry's Tax Service during December. Required: 2. Conceptual Connection: What would be the effect on the balance sheet and the income statement if the accountant failed to make the above adjusting entries