Question

The Jamesway Corporation had the following situations on December 2016.

1.On December 20, 2016, Jamesway received a $5,500 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 $5,000 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 $31,000 will be paid on January 7, 2017.

4.On August 31, 2016, Jamesway borrowed $85,000 from a local bank. A note was signed with principal and 6% interest to be paid on August 31, 2017.

If none of the adjusting journal entries were recorded, would assets, liabilities, and shareholders’ equity on the 12/31/16 balance sheet be higher or lower and by how much?