Response to the following :
Income determination
If none of the adjusting journal entries prepared in problem 1, were recorded, would assets, liabilities, and shareholders' equity on the 12/31/16 balance sheet be higher or lower and by how much?
Problem 1: Adjusting entries
Prepare the necessary adjusting entries at its year-end of December 31, 2016, for the Jamesway Corporation for each of the following situations. No adjusting entries were recorded during the year.
1. On December 20, 2016, Jamesway received a $4,000 payment from a customer for services to be rendered early in 2017. Service revenue was credited.
2. On December 1, 2016, the company paid a local radio station $2,000 for 40 radio ads that were to be aired, 20 per month, throughout December and January. Prepaid advertising was debited.
3. Employee salaries for the month of December totaling $16,000 will be paid on January 7, 2017.
4. On August 31, 2016, Jamesway borrowed $60,000 from a local bank. A note was signed with principal and 8% interest to be paid on August 31, 2017.