Additional Information Items a. An analysis of PVA's insurance policies shows that $3,732 of coverage has expired. b. An inventory count shows that teaching supplies costing $3,235 are available at year-end. C. Annual depreciation on the equipment is $14,929. d. Annual depreciation on the professional library is $7,464. e. On September 1, PVA agreed to do five courses for a client for $2,700 each. Two courses will start immediately and finish before the end of the year. Three courses will not begin until next year. The client paid $13,500 cash in advance for all five courses on September 1, and PVA credited Unearned Training Fees. On October 15, PVA agreed to teach a four-month class (beginning immediately) for an executive with payment due at the end of the class. At December 31, $11,600 of the tuition has been earned by PVA. g. PVA's two employees are paid weekly. As of the end of the year, two days' salaries have accrued at the rate of $100 per day for each employee. h. The balance in the Prepaid Rent account represents rent for December. Pitt-Vaughn Academy Unadjusted Trial Balance December 31 Credit Debit 27,396 $ 10,536 15,806 2,108 31,610 $ 9,484 73,751 16,861 36,022 Cash Accounts receivable Teaching supplies Prepaid insurance Prepaid rent Professional library Accumulated depreciation-Professional library Equipment Accumulated depreciation-Equipment Accounts payable Salaries payable Unearned training fees L. Pitt-Vaughn, Capital L. Pitt-Vaughn, Withdrawals Tuition fees earned Training fees earned Depreciation expense-Professional library Depreciation expense-Equipment Salaries expense Insurance expense Rent expense Teaching supplies expense Advertising expense Utilities expense Totals 13,500 67,016 42,149 107,477 40,040 50,579 23,188 7,376 5,901 $ 290,400 $ 290,400 Required: 1. Prepare the required adjusting journal entries for items a through h. 2. Prepare the Adjusted Trial Balance 3. Prepare the Income Statement for the year end 4. Prepare the Statement of Owner's Equity for the year 5. Prepare the Balance Sheet as of December 31 Use the information in the financial statements to calculate the following ratios: 1. Return on Assets 2. Debt ratio 3. Profit margin 4. Current ratio Below are the industry averages for the corresponding ratios Return on Assets = 11.48% Debt ratio = 42% Profit margin = 21.60% Current ratio = 1.06 How does the company's performance compare to that of the industry? Provide a brief discussion of the company's performance. Your discussion should be at least 4 well-articulated sentences
