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Following is data for Pitt-Vaughn Academy (PVA). Use the data below to answer each of the enumerated requirements. Pitt-Vaughn Academy (PVA), a school owned by

Following is data for Pitt-Vaughn Academy (PVA). Use the data below to answer each of the enumerated requirements.

Pitt-Vaughn Academy (PVA), a school owned by Lily Pitt-Vaughn, provides training to individuals who pay tuition directly to the school. PVA also offers training to groups in off-site locations. PVA initially records prepaid expenses and unearned revenues in balance sheet accounts. Its unadjusted trial balance as of December 31 follows along with descriptions of items a through h that require adjusting entries on December 31. Additional Information Items

  1. An analysis of PVA's insurance policies shows that $3,732 of coverage has expired.
  2. An inventory count shows that teaching supplies costing $3,235 are available at year-end.
  3. Annual depreciation on the equipment is $14,929.
  4. Annual depreciation on the professional library is $7,464.
  5. 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.
  6. 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.
  7. 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.
  8. The balance in the Prepaid Rent account represents rent for December.

Pitt-Vaughn Academy Unadjusted Trial Balance December 31

Debit

Credit

Cash

$

27,396

Accounts receivable

0

Teaching supplies

10,536

Prepaid insurance

15,806

Prepaid rent

2,108

Professional library

31,610

Accumulated depreciationProfessional library

$

9,484

Equipment

73,751

Accumulated depreciationEquipment

16,861

Accounts payable

36,022

Salaries payable

0

Unearned training fees

13,500

L. Pitt-Vaughn, Capital

67,016

L. Pitt-Vaughn, Withdrawals

42,149

Tuition fees earned

107,477

Training fees earned

40,040

Depreciation expenseProfessional library

0

Depreciation expenseEquipment

0

Salaries expense

50,579

Insurance expense

0

Rent expense

23,188

Teaching supplies expense

0

Advertising expense

7,376

Utilities expense

5,901

Totals

$

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 Owners 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 companys performance compare to that of the industry? Provide a brief discussion of the companys performance. Your discussion should be at least 4 well-articulated sentences.

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