2. Conceptual Connection: What would be the effect on expenses if the adjusting entries were not made?

Expense Adjustments 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 Dec. 31 Insurance Expense 1,620 Prepaid Insurance 1,620 (Record use of prepaid insurance) Dec. 31 Utilities Expense 1,520 Utilities Payable 1,520 (Record use of utilities) Dec. 31 Rent Expense 1,440 Rent Payable 1,440 (Record use of equipment) Dec. 31 Advertising Expense 2,900 2.900 Prepaid Advertising (Record use of prepaid advertising) 2. Conceptual Connection: What would be the effect on expenses if the adjusting entries were not made? a. Expenses would be understated and assets would be understated, net income and stockholders' equity would be overstated. Expenses would be understated and assets would be understated, net income and stockholders' equity would be overstated. Expenses would be understated and assets would be understated, net income and stockholders' equity would be overstated. d. Expenses would be understated and assets would be understated, net income and stockholders' equity would be overstated. Cumulative effect on expenses: by $ (Record use of equipment Expenses would be overstated and assets would be overstated, net income and stockholders' equity would be overstated. Dec. 31 Ad Expenses would be overstated and assets would be understated, net income and stockholders' equity would be overstated. Expenses would be overstated and liabilities would be overstated, net income and stockholders' equity would be overstated. Expenses would be overstated and liabilities would be understated, net income and stockholders' equity would be overstated. 2. Conceptu Expenses would be understated and liabilities would be overstated, net income and stockholders' equity would be overstated. a. Exper Expenses would be understated and liabilities would be understated, net income and stockholders' equity would be overstated. . Exper Expenses would be understated and assets would be overstated, net income and stockholders' equity would be overstated. Expen Expenses would be understated and assets would be understated, net income and stockholders' equity would be overstated. Expenses would be understated and assets would be understated, net income and stockholders' equity would be overstated. Cumulative effect on expenses: by $