Exercise 3-7 Adjusting entries (annual) LO4 On January 1, you started a tutoring business called Brain Worx and charge $33 an hour for tutoring. The following are your transactions for 2020. Assume Brain Worx uses the straight-line method to depreciate its assets. a. On January 1. you purchased a computer from Apple Inc. for $1,050 cash. You estimate that your computer will last three years. After that time, you will give the computer to your sister as a gift. b. On February 1, you paid $744 cash for one year of insurance coverage. c. On March 1. you purchased supplies including paper, pens, and notebooks for $820 cash at Staples. At the end of the year, you had $246 of supplies left! d. On November 1, Charlotte, a student, pays cash for eight hours of tutoring per month for November 2020, December 2020, and January 2021 e. You tutor George for four hours in December. However, George was away for Christmas and has promised to pay you in January 2021 f. On December 31, 2020, Telus sends your December business cell phone bill for $132. The bill is due January 15, 2021 Required: 1. For transactions (o) to (d), record the initial journal entry during the year. Problem 3-6A Adjusting entries (annual); adjusted trial balance LO4,6 PacRim Careers provides training to individuals who pay tuition directly to the business. The business also offers extension training to groups in off-site locations. Additional Information available at the December 31, 2020. year end follows a. An analysis of the company's policies shows that $1.280 of insurance coverage has expired. b. An inventory shows that teaching supplies costing $480 are on hand at the end of the year, c. The estimated annual depreciation on the equipment is $8,375 d. The estimated annual depreciation on the professional library is $4.635. e. The school offers off-campus services for specific employers On November 1, the company agreed to do a special six month course for a client. The contract calls for a monthly fee of $920, and the client paid the first five months revenue in advance. When the cash was received, the Unearned Extension Revenue account was credited. f. On October 15, the school agreed to teach a four-month class for an individual for $1220 tuition per month payable at the end of the class. The services to date have been provided as agreed, but no payment has been received g. The school's two employees are paid weekly. As of the end of the year, three days wages have accrued at the rate of $120 per day for each employee. h. The balance in the Prepaid Rent account represents the rent for three months: December, January, and February Adjusted Trial Balance Adjustments Dr. Cr. De Cr. PACRIM CAREERS Trial Balances December 31, 2020 Unadjusted Triol Balance Dr. Cr. $ 18,300 0 6,800 1,430 7,650 61,800 $ 18,540 180,500 33,500 2.650 ces Account Cash Accounts receivable Teaching supplies Prepaid insurance Prepaid rent Professional library Accumulated depreciation, professional library Equipment Accumulated depreciation, equipment Accounts payable Salaries payable Unearned extension revenue Karoo Ashevak, capital Karoo Ashevak, withdrawals Tuition revenue Extension revenue Depreciation expense, equipment Depreciation expense, professional Library Salaries expense Insurance expense Rent expense Teaching supplies expense Advertising expense Utilities expense Totals 6,600 232,000 93,500 202,990 75,500 e 209,000 47,000 14,300 11.500 $571,780 $571,780 Required: 1. Prepare the necessary annual adjusting Journal entries at December 31, 2020, based on (a) to th) above
