Chapter 2, Problem 2.4IE

The following transactions occurred during December 31, 2021, for the Microchip Company.  On October 1, 2021, Microchip lent $90,000 to another company. A note was signed with principal and 8% interest to be paid on September 30, 2022. On November 1, 2021, the company paid its landlord $6,000 representing rent for the months of November through January. Prepaid rent was debited. On August 1, 2021, collected $12,000 in advance rent from another company that is renting a portion of Microchip’s factory. The $12,000 represents one year’s rent and the entire amount was credited to deferred rent revenue. Depreciation on office equipment is $4,500 for the year. Vacation pay for the year that had been earned by employees but not paid to them or recorded is $8,000. The company records vacation pay as salaries expense. Microchip began the year with $2,000 in its asset account, supplies. During the year, $6,500 in supplies were purchased and debited to supplies. At year-end, supplies costing…

The following transactions occurred during December 31, 2021, for the Falwell Company.  A three-year fire insurance policy was purchased on July 1, 2021, for $12,240. The company debited insurance expense for the entire amount. Depreciation on equipment totaled $12,250 for the year. Employee salaries of $16,500 for the month of December will be paid in early January 2022. On November 1, 2021, the company borrowed $190,000 from a bank. The note requires principal and interest at 12% to be paid on April 30, 2022. On December 1, 2021, the company received $6,000 in cash from another company that is renting office space in Falwell’s building. The payment, representing rent for December, January, and February was credited to deferred rent revenue. On December 1, 2021, the company received $6,000 in cash from another company that is renting office space in Falwell’s building. The payment, representing rent for December, January, and February was credited to rent revenue rather than deferred…

The Jamesway Corporation had the following situations on December 2021.   Employee salaries for the month of December totaling $16,000 will be paid on January 7, 2022. On August 31, 2021, Jamesway borrowed $60,000 from a local bank. A note was signed with principal and 8% interest to be paid on August 31, 2022.   If none of the adjusting journal entries were recorded, would assets, liabilities, and shareholders’ equity on the 12/31/2021 balance sheet be higher or lower and by how much?  This is the question I am stuck on. Does the employees salaries not factor in the December 2021 figures because the employees are paid on January 2022? How do I figure the amounts of  liability and equity affected for number two, the note with 8% interest?