7 O 59%Blackboard10:35 AMeast.cengagenow.comJLACICIO U J IU13.Check My Work14.15.еВook16.Exercise 3-4817.Expense AdjustmentsFaraday Electronic Service repairs stereos and DVD18.players. During 2013, Faraday engaged in the19.following activities:a. On September 1, Faraday paid Wausau Insurance$4,860 for its liability insurance for the next 12months. The full amount of the prepayment wasdebited to prepaid insurance.b. At December 31, Faraday estimates that $1,520 ofutility costs are unrecorded and unpaid.c. Faraday rents its testing equipment from JVCEquipment rent in the amount of $1,440 is unpaidand unrecorded at December 31.d. In late October, Faraday agreed to become thesponsor for the sports segment of the eveningnews program on a local television station. Thestation billed Faraday $4,350 for 3 months'sponsorship-November 2013, December 2013,and January 2014-in advance. When thesepayments were made, Faraday debited prepaidadvertising. At December 31, 2 months'advertising has been used and 1 month remainsunusedRequired:Hide

Question
Asked Sep 24, 2019
125 views

Required:


  Hide    

1.  Prepare adjusting entries at December 31 for these four activities.



 
 
       
Dec. 31
 
 
 
 
 
 
 
 
(Record use of prepaid insurance)
   
       
Dec. 31
 
 
 
 
 
 
 
 
(Record use of utilities)
   
       
Dec. 31
 
 
 
 
 
 
 
 
(Record use of equipment)
   
       
Dec. 31
 
 
 
 
 
 
 
 
(Record use of prepaid advertising)
   
       

 

 

2.  Conceptual Connection: What would be the effect on expenses if the adjusting entries were not made?

a. SelectExpenses would be overstated and assets would be overstated, net income and stockholders' equity would be overstated.Expenses would be overstated and assets would be understated, net income and stockholders' equity would be overstated.Expenses would be overstated and liabilities would be overstated, net income and stockholders' equity would be overstated.Expenses would be overstated and liabilities would be understated, net income and stockholders' equity would be overstated.Expenses would be understated and liabilities would be overstated, net income and stockholders' equity would be overstated.Expenses would be understated and liabilities would be understated, net income and stockholders' equity would be overstated.Expenses would be understated and assets would be overstated, net income and stockholders' equity would be overstated.Expenses would be understated and assets would be understated, net income and stockholders' equity would be overstated.Correct 1 of Item 2
b. SelectExpenses would be overstated and assets would be overstated, net income and stockholders' equity would be overstated.Expenses would be overstated and assets would be understated, net income and stockholders' equity would be overstated.Expenses would be overstated and liabilities would be overstated, net income and stockholders' equity would be overstated.Expenses would be overstated and liabilities would be understated, net income and stockholders' equity would be overstated.Expenses would be understated and liabilities would be overstated, net income and stockholders' equity would be overstated.Expenses would be understated and liabilities would be understated, net income and stockholders' equity would be overstated.Expenses would be understated and assets would be overstated, net income and stockholders' equity would be overstated.Expenses would be understated and assets would be understated, net income and stockholders' equity would be overstated.Correct 2 of Item 2
c. SelectExpenses would be overstated and assets would be overstated, net income and stockholders' equity would be overstated.Expenses would be overstated and assets would be understated, net income and stockholders' equity would be overstated.Expenses would be overstated and liabilities would be overstated, net income and stockholders' equity would be overstated.Expenses would be overstated and liabilities would be understated, net income and stockholders' equity would be overstated.Expenses would be understated and liabilities would be overstated, net income and stockholders' equity would be overstated.Expenses would be understated and liabilities would be understated, net income and stockholders' equity would be overstated.Expenses would be understated and assets would be overstated, net income and stockholders' equity would be overstated.Expenses would be understated and assets would be understated, net income and stockholders' equity would be overstated.Correct 3 of Item 2
d. SelectExpenses would be overstated and assets would be overstated, net income and stockholders' equity would be overstated.Expenses would be overstated and assets would be understated, net income and stockholders' equity would be overstated.Expenses would be overstated and liabilities would be overstated, net income and stockholders' equity would be overstated.Expenses would be overstated and liabilities would be understated, net income and stockholders' equity would be overstated.Expenses would be understated and liabilities would be overstated, net income and stockholders' equity would be overstated.Expenses would be understated and liabilities would be understated, net income and stockholders' equity would be overstated.Expenses would be understated and assets would be overstated, net income and stockholders' equity would be overstated.Expenses would be understated and assets would be understated, net income and stockholders' equity would be overstated.Correct 4 of Item 2
Cumulative effect on expenses: SelectOverstatedUnderstatedCorrect 5 of Item 2by $
 

 

7 O 59%
Blackboard
10:35 AM
east.cengagenow.com
JLACICIO U J IU
13.
Check My Work
14.
15.
еВook
16.
Exercise 3-48
17.
Expense Adjustments
Faraday Electronic Service repairs stereos and DVD
18.
players. During 2013, Faraday engaged in the
19.
following activities:
a. On September 1, Faraday paid Wausau Insurance
$4,860 for its liability insurance for the next 12
months. The full amount of the prepayment was
debited to prepaid insurance.
b. At December 31, Faraday estimates that $1,520 of
utility costs are unrecorded and unpaid.
c. Faraday rents its testing equipment from JVC
Equipment rent in the amount of $1,440 is unpaid
and unrecorded at December 31.
d. In late October, Faraday agreed to become the
sponsor for the sports segment of the evening
news program on a local television station. The
station billed Faraday $4,350 for 3 months'
sponsorship-November 2013, December 2013,
and January 2014-in advance. When these
payments were made, Faraday debited prepaid
advertising. At December 31, 2 months'
advertising has been used and 1 month remains
unused
Required:
Hide
help_outline

Image Transcriptionclose

7 O 59% Blackboard 10:35 AM east.cengagenow.com JLACICIO U J IU 13. Check My Work 14. 15. еВook 16. Exercise 3-48 17. Expense Adjustments Faraday Electronic Service repairs stereos and DVD 18. players. During 2013, Faraday engaged in the 19. following activities: a. On September 1, Faraday paid Wausau Insurance $4,860 for its liability insurance for the next 12 months. The full amount of the prepayment was debited to prepaid insurance. b. At December 31, Faraday estimates that $1,520 of utility costs are unrecorded and unpaid. c. Faraday rents its testing equipment from JVC Equipment rent in the amount of $1,440 is unpaid and unrecorded at December 31. d. In late October, Faraday agreed to become the sponsor for the sports segment of the evening news program on a local television station. The station billed Faraday $4,350 for 3 months' sponsorship-November 2013, December 2013, and January 2014-in advance. When these payments were made, Faraday debited prepaid advertising. At December 31, 2 months' advertising has been used and 1 month remains unused Required: Hide

fullscreen
check_circle

Expert Answer

Step 1

Attached are the adjusting entries to be posted on Dec 31 for transactions mentioned in the question- 

Amount for prepaid Insurance entry has been calculated as-
= $4860/12 x 4mnths= $1,620
(for Sep to dec i.e. 4mnths out of the...
Record use of prepaid insurance
Particulars
Debit Insurance expense a/c
Credit Prepaid insurance a/c
Amount in $
Date
Dec 31,2013
1620
1620
Record use of utilities
Particulars
Debit Utility Expense a/c
Credit Utility Expense payable a/c
Amount in $
Date
Dec 31,2013
1520
1520
Record use of equipment
Particulars
Debit Equipment rent a/c
|Credit Equipment rent payable a/c
Amount in $
Date
Dec 31,2013
1440
1440
Record use of prepaid advertising
Particulars
Debit Advertising expense a/c
Credit Prepaid Advertising a/c
Amount in $
Date
Dec 31,2013
2900
2900
help_outline

Image Transcriptionclose

Record use of prepaid insurance Particulars Debit Insurance expense a/c Credit Prepaid insurance a/c Amount in $ Date Dec 31,2013 1620 1620 Record use of utilities Particulars Debit Utility Expense a/c Credit Utility Expense payable a/c Amount in $ Date Dec 31,2013 1520 1520 Record use of equipment Particulars Debit Equipment rent a/c |Credit Equipment rent payable a/c Amount in $ Date Dec 31,2013 1440 1440 Record use of prepaid advertising Particulars Debit Advertising expense a/c Credit Prepaid Advertising a/c Amount in $ Date Dec 31,2013 2900 2900

fullscreen

Want to see the full answer?

See Solution

Check out a sample Q&A here.

Want to see this answer and more?

Solutions are written by subject experts who are available 24/7. Questions are typically answered within 1 hour.*

See Solution
*Response times may vary by subject and question.
Tagged in

Business

Accounting

Related Accounting Q&A

Find answers to questions asked by student like you

Show more Q&A add
question_answer

Q: PurrChem’s raw materials records contained the following information for the month of August:August ...

A: Inventory includes stock of raw material, work-in progress for the purpose of producing final goods ...

question_answer

Q: Preparing a balance sheet, allowance for uncollectible accounts goes under what heading?

A: Allowance for Uncollectible Accounts indicates the amount of receivables that are expected to remain...

question_answer

Q: On January 1, 2021, Pharoah Corp. had 491,000 shares of common stock outstanding. During 2021, it ha...

A: Earnings per share is a financial ratio that represents the value income earned for one share. The p...

question_answer

Q: What represents a company’s primary means of cummunicaying information to external users?

A: First of all, we need to understand who are external users- these are the people who are interested ...

question_answer

Q: A 15-year bond with a face value of $1,000 currently sells for $850. Which of the following statemen...

A: Bonds: The bond refers to a long-term liability for which the compensation in the form of interest i...

question_answer

Q: E 16-4 Partnership income allocation—Salary allowance and interest The partnership agreement of Dan,...

A: The partnershipp profits are distributed between partners on the basis of the partnership agreement....

question_answer

Q: Journalize the following transactions by Ayayai Printing Company. (Credit account titles are automat...

A: Journalize the given transactions (1-5).

question_answer

Q: Which of the following statements concerning general ledger accounts is true?  The general ledge...

A: Explanation: General ledger is used in the financial accounting to record the financial transactions...

question_answer

Q: Sunland Company has issued 1,900 shares of common stock and 380 shares of preferred stock for a lump...

A: The stock in which shareholder’s are entitled to received dividend whose amount may vary from time t...