For each of the following situations indicate whether assets, liabilities, equity, revenues, and expenses are overstated (too high), understated (too low), or unaffected by the error in the June 30, 2014 financial statements. Briefly explain why the effects occur and state any assumptions you make.

a. Employees are paid monthly on the 15th. No adjusting entry was made at the end of June. The employees will be paid $52,000 on July 15.

b. On March 15, 2014 $500 was received from a customer paying in advance for lawn care services that were to be provided from April to October 2014. The bookkeeper credited revenue for $500 when the cash was received. No adjusting entry was made on June 30, 2014.

c. On September 1, 2013 a company borrowed $1,000,000 from a private lender. The interest rate on the loan is 6 percent per year. Interest must be paid on August 31 and February 28 of each year. The loan principal must be paid in full on August 31, 2018. No adjusting entry was made by the borrower with respect to the loan and interest on June 30, 2014.

d. On January 3, 2014 a company purchased a new delivery truck for $35,000. The company estimates the truck will be used for five years. No adjusting entry was made at year-end.

e. On June 30, 2014 the bookkeeper made an entry to record revenue that was previously unearned. The adjustment recognized $12,000 of revenue instead of $21,000.