The Jamesway Corporation had the following situations on December 2018. On December 20, 2018, Jamesway received...

The Jamesway Corporation had the following situations on December 2018. On December 20, 2018, Jamesway received a $6,000 payment from a customer for services to be rendered early in 2019. Service revenue was credited. On December 1, 2018, the company paid a local radio station $6,000 for 40 radio ads that were to be aired, 20 per month, throughout December and January. Prepaid advertising was debited. Employee salaries for the month of December totaling $36,000 will be paid on January 7, 2019. On August 31, 2018, Jamesway borrowed $75,000 from a local bank. A note was signed with principal and 6% interest to be paid on August 31, 2019. If none of the adjusting journal entries were recorded, would assets, liabilities, and shareholders’ equity on the 12/31/18 balance sheet be higher or lower and by how much?

If none of the adjusting journal entries were recorded, would assets, liabilities, and shareholders’ equity on the 12/31/18 balance sheet be higher or lower and by how much?

Expert Solution

Summary
	Amount	Effect
Assets	3,000	Higher
Liabilities	43,500	Lower
Stock Holder's Equity	46,500	Higher

		Effect				Remarks
Sr. No.	Transacrtion	Amount	Assets	Liabilities	Stock Holder's Equity	Missing Entry
1	Jamesway received a $6,000 payment from a customer for services to be rendered early in 2019.	6,000		Lower	Higher	Service revenue	6,000
						Unearned Service Revenue		6,000

2	The company paid a local radio station $6,000 for 40 radio ads that were to be aired, 20 per month, throughout December and January.	3,000	Higher		Higher	Advertising Expense	3,000
						Prepaid Advertising		3,000

3	Employee salaries for the month of December totaling $36,000 will be paid on January 7, 2019.	36,000		Lower	Higher	Salaries Expense	36,000
						Salaries Payable		36,000

4	Jamesway borrowed $75,000 from a local bank. A note was signed with principal and 6% interest to be paid on August 31, 2019	1,500		Lower	Higher	Interest Expense	1,500
						Interest Payable		1,500

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ekkarill92 answered 1 year ago

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