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Consider the following situations for a company: 1. On November 28, Year 1, the company receives a $2,400 payment from a customer for services to be rendered evenly over the next three months. Deferred Revenue is credited. 2. On December 1, Year 1, the company pays a local radio station $2,280 for 30 radio ads that were to be aired, 10 per month, throughout December, January, and February. Prepaid Advertising is debited. 3. Employee salaries for the month of December totaling $6,600 will be paid on January 7, Year 2. 4. On August 31, Year 1, the company borrows $56,000 from a local bank. A note is signed with principal and 6% interest to be paid on August 31, Year 2. Required: Indicate by how much the assets, liabilities, and stockholders' equity in the December 31, Year 1, balance sheet is higher or lower if the adjustment is not recorded. (If none of the categories apply for a particular item, leave the cell blank.)

Consider the following situations for a company: 1. On November 28, Year 1, the company receives a $2,400 payment from a customer for services to be rendered evenly over the next three months. Deferred Revenue is credited. 2. On December 1, Year 1, the company pays a local radio station $2,280 for 30 radio ads that were to be aired, 10 per month, throughout December, January, and February. Prepaid Advertising is debited. 3. Employee salaries for the month of December totaling $6,600 will be paid on January 7, Year 2. 4. On August 31, Year 1, the company borrows $56,000 from a local bank. A note is signed with principal and 6% interest to be paid on August 31, Year 2. Required: Indicate by how much the assets, liabilities, and stockholders' equity in the December 31, Year 1, balance sheet is higher or lower if the adjustment is not recorded. (If none of the categories apply for a particular item, leave the cell blank.)

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Ashavinbhai 

Consider the following situations for a company: 1. On November 28, Year 1, the company receives a $2,400 payment from a customer for services to be rendered evenly over the next three months. Deferred Revenue is credited. 2. On December 1, Year 1, the company pays a local radio station $2,280 for 30 radio ads that were to be aired, 10 per month, throughout December, January, and February. Prepaid Advertising is debited. 3. Employee salaries for the month of December totaling $6,600 will be paid on January 7, Year 2. 4. On August 31, Year 1, the company borrows $56,000 from a local bank. A note is signed with principal and 6% interest to be paid on August 31, Year 2. Required: Indicate by how much the assets, liabilities, and stockholders' equity in the December 31, Year 1, balance sheet is higher or lower if the adjustment is not recorded. (If none of the categories apply for a particular item, leave the cell blank.)
Transcribed Image Text:Consider the following situations for a company: 1. On November 28, Year 1, the company receives a $2,400 payment from a customer for services to be rendered evenly over the next three months. Deferred Revenue is credited. 2. On December 1, Year 1, the company pays a local radio station $2,280 for 30 radio ads that were to be aired, 10 per month, throughout December, January, and February. Prepaid Advertising is debited. 3. Employee salaries for the month of December totaling $6,600 will be paid on January 7, Year 2. 4. On August 31, Year 1, the company borrows $56,000 from a local bank. A note is signed with principal and 6% interest to be paid on August 31, Year 2. Required: Indicate by how much the assets, liabilities, and stockholders' equity in the December 31, Year 1, balance sheet is higher or lower if the adjustment is not recorded. (If none of the categories apply for a particular item, leave the cell blank.)
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