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 $1,260 of insurance coverage has expired. b. An inventory shows that teaching supplies costing $460 are on hand at the end of the year. c. The estimated annual depreciation on the equipment is $8,125 d. The estimated annual depreciation on the professional library is $4,545. 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 $940, 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 $1,210 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 $110 per day for each employee. h. The balance in the Prepaid Rent account represents the rent for three months: December, January, and February. Adjustments Dr. Cr Adjusted Trial Balance Dr. Cr. Equipment PACRIM CAREERS Trial Balances December 31, 2020 Unadjusted Trial Balance Account Dr. Cr. Cash $ 18,100 Accounts Teaching supplies 6,600 Prepaid insurance 1,410 Prepaid rent 7,350 Professional library 60, 600 Accumulated depreciation, professional library $ 18,180 97,500 Accumulated depreciation, equipment 32,500 Accounts payable 2,550 Salaries payable 0 Unearned extension revenue 6,400 Karoo Ashevak, capital 230,000 Karoo Ashevak, withdrawals 92,500 Tuition revenue 198,330 Extension revenue 73,500 Depreciation expense, equipment 0 Depreciation expense, professional library Salaries expense 207,000 Insurance expense Rent expense 45,000 Teaching supplies expense 0 Advertising expense 14,100 Utilities expense 11,300 Totals $561,460 $561,460 Required: 1. Prepare the necessary annual adjusting journal entries at December 31, 2020, based on (a) to (h) above. View transaction list X: 1 Record the cost of insurance expired during the year. > 2 Record the cost of supplies used during the year. 3 Record the equipment depreciation expense. 4 Record the professional library depreciation expense. 5 Record the entry to adjust the unearned extension Credit revenue account. 6 Record the amount of tuition revenue earned. 7 Record the accrued salaries expense. 8 Record the expiration of prepaid rent. = journal entry has been entered Note : Record entry Clear entry View general journal 3. If the adjustments were not recorded, calculate the over- or understatement of income. 4. Is it ethical to ignore adjusting entries? No O Yes
