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 $1,160 of Insurance coverage has expired. b. An inventory shows that teaching supplies costing $360 are on hand at the end of the year. C. The estimated annual depreciation on the equipment is $6,875 d. The estimated annual depreciation on the professional library is $4,095. 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 $760, 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 $1,110 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. Dr. Cr. PACRIM CAREERS Trial Balances December 31, 2020 Unadjusted Trial Balance Account Cash $ 17,100 Accounts receivable Teaching supplies 5,600 Prepaid insurance 1,310 Prepaid rent 5,850 Professional library 54,600 Accumulated depreciation, professional library $ 16,380 Equipment 82,500 Accumulated depreciation, equipment 27,500 Accounts payable 2,050 Salaries payable @ Unearned extension revenue 5,400 Karoo Ashevak, capital 220,000 Karoo Ashevak, withdrawals 87,500 Tuition revenue 175,030 Extension revenue 63,500 Depreciation expense, equipment Depreciation expense, professional library Salaries expense 197,000 Insurance expense Rent expense 35,000 Teaching supplies expense Advertising expense 13,100 Utilities expense 10,300 Totals $509,860 $509,860 Required: 1. Prepare the necessary annual adjusting journal entries at December 31, 2020, based on (a) to (n) above. View transaction list Journal entry worksheet 2 3 4 5 6 7 8 1 2 3 ^ Record the cost of insurance expired during the year. Note: Enter debits before credits. General Journal Debit Credit Date Dec 31, 2020 Record entry Clear entry View general journal Analysis Component: 2. Complete the adjusted trial balance using the information in (a) through (h) above. PACRIM CAREERS Trial Balances December 31, 2020 Unadjusted Trial Balance Adjusted Trial Balance Adjustments Dr. Cr. Account Dr. Cr. Dr. Cr. Cash $ 17,100 0 5,600 1,310 5,850 54,600 $ 16,380 82,500 27,500 2,050 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 0 5,400 220,000 87,500 175,030 63,500 0 0 197,000 Insurance expense 0 35,000 0 TI Rent expense Teaching supplies expense Advertising expense Utilities expense 13,100 10,300 $ 509,860 $ 509,860 $ Totals 0 0 $ 0 $ 0 3. If the adjustments were not recorded, calculate the over- or understatement of income. 4. Is it ethical to ignore adjusting entries? Yes
