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Instructions Faraday Electronic Service repairs stereos and DVD players. During 2019, Faraday engaged in the 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 2019, December 2019, and January 2020-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: 1. Prepare adjusting entries at December 31 for these four activities. 2. Conceptual Connection: What would be the effect on expenses if the adjusting entries were not made? Chart of Accounts General Ledger REVENUE ASSETS 111 Cash 411 Sales Revenue 121 Accounts Receivable 412 Service Revenue 413 Interest Income 122 Notes Receivable 123 Supplies 414 Rent Revenue 124 Prepaid Insurance EXPENSES 125 Prepaid Rent 511 Cost of Goods Sold 126 Inventory 512 Advertising Expense 127 Interest Receivable 513 Supplies Expense 130 Investment 514 Utilities Expense 131 Land 515 Rent Expense 132 Buildings 516 Insurance Expense 133 Equipment 521 Wages Expense 134 Furniture 531 Interest Expense 135 Trucks 532 Depreciation Expense 139 Accumulated Depreciation 541 Income Taxes Expense 140 Prepaid Advertising Chart of Accounts LIABILITIES 211 Accounts Payable 212 Notes Payable 213 Income Taxes Payable 214 Wages Payable 215 Utilities Payable 216 Insurance Payable 217 Rent Payable 221 Interest Payable 222 Unearned Service Revenue 223 Unearned Rent Revenue 231 Bonds Payable EQUITY 311 Common Stock 321 Retained Earnings 331 Dividends 350 Income Summary Final Question 2. Conceptual Connection: What would be the effect on expenses if the adjusting entries were not made? a. If this entry were not made, expenses would and assets would Additionally, net income and stockholders' equity would b. If this entry were not made, expenses would and liabilities would Additionally, net income and stockholders' equity would c. If this entry were not made, expenses would and liabilities would Additionally, net income and stockholders' equity would d. If this entry were not made, expenses would and assets would Additionally, net income and stockholders' equity would Additional Instruction Cumulative effect on expenses: by $ General Journal General Journal Instructions PAGE 1 IMPACT ON FINANCIAL STATEMENTS GENERAL JOURNAL INCOME STATEMENT BALANCE SHEET EXPENSES ACCOUNT TITLE POST. REF DATE DEBIT CREDIT ASSETS LIABILITIES EQUITY REVENUE NET INCOME Adjusting Entries 1 2 3 4 5 6 7 8 9

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