year: a. Computer equipment was purchased from IBM 3 years ago at a cost of $540,000. Annual depreciation is $126,600. (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.) unrecorded. computer time used by Perry's Tax Service during December. a. Dec. 31 Depreciation Expense Accumulated Depreciation b. Dec. 31 Insurance Expense Prepaid Insurance C. Dec. 31 Accounts Receivable Service Revenue d. Dec. 31 e. Dec. 31 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