Question & Answer: 1. (1 point each) Prepare AJEs that should be made on 12-31-15, the end of the accounting year, for each of the following situations. If no AJE is r…..

1.      (1 point each) Prepare AJEs that should be made on 12-31-15, the end of the accounting year, for each of the following situations. If no AJE is required, indicate “none.” Assume the company only makes AJEs at the end of the accounting year. In addition, identify the impact, if any, on the financial statements if you failed to make the appropriate AJE. Indicate NE for no impact, U for understatement, and O for overstatement. Use the following format to indicate the impact of failing to make the required entry for each situation.

Assets                        Liabilities                Expenses                                    Revenues                                    Net Income               Owners’ Equity

XX                              XX                              XX                              XX                              XX                              XX

On July 1, 2015, the company rented a machine for 10 months and paid $5,000 in advance. The journal entry to record the payment included a debit to a permanent account.

On March 1, 2015, the company collected $1,800 of rent for 12 months in advance. The journal entry to record the receipt included a credit to a balance sheet account.

On September 1, 2015, the company collected $6,000 as rent for 6 months in advance. The journal entry to record the receipt included a credit to a temporary account.

On February 1, 2015, the company invested in a $100,000, 10-year bond that pays 3% interest every six months starting August 1, 2015.

On April 30, 2015, the company rented equipment for 10 months and paid $10,000 in advance. The journal entry to record the payment included a debit to a temporary account.