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 $1,300 of insurance coverage has expired. b. An inventory shows that teaching supplies costing $500 are on hand at the end of the year. c. The estimated annual depreciation on the equipment is $8,625 d. The estimated annual depreciation on the professional library is $4,725. 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 $900, 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 $1,250 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 9. The school's two employees are paid weekly. As of the end of the year, three days' wages have accrued at the rate of $130 per day for each employee. h. The balance in the Prepaid Rent account represents the rent for three months: December, January, and February CARTI Adjustments Dr. Cr. Adjusted Trial Balance Dr. Cr. PACRIM CAREERS Trial Balances December 31, 2020 Unadjusted Trial Balance Account Dr. Cr. Cash $ 18,500 Accounts receivable 0 Teaching supplies 7,000 Prepaid insurance 1,450 Prepaid rent 7,950 Professional library 63,000 Accumulated depreciation, professional library $ 18,900 Equipment 103,500 Accumulated depreciation, equipment 34,500 Accounts payable 2,750 Salaries payable 0 Unearned extension revenue 6,800 Karoo Ashevak, capital 234,000 Karoo Ashevak, withdrawals 94,500 Tuition revenue 207,650 Extension revenue 77,500 0 Depreciation expense, equipment Depreciation expense, professional library 0 Salaries expense 211,000 Insurance expense 0 Rent expense 49,000 Teaching supplies expense 0 Advertising expense 14,500 Utilities expense 11,700 Totals $582, 100 $582, 100 6X 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 revenue account. Credit 6 Record the amount of tuition revenue earned. 7 Record the accrued salaries expense. Note : = journal entry has been entered Record entry Clear entry View general journal 2. Complete the adjusted trial balance using the information in (a) through (h) above. PACRIM CAREERS Trial Balances December 31, 2020 Unadjusted Trial Balance Cr. 18,500 0 Adjusted Trial Balance Dr. Cr. Adjustments Dr. Cr. Dr. $ 7,000 1,450 7,950 63,000 $ 18,900 103,500 Account Cash Accounts receivable Teaching supplies Prepaid insurance Prepaid rent Professional library Accumulated depreciation, professional library Equipment Accumulated depreciation, equipment Accounts payable Salaries payable Uneamed extension revenue Karoo Ashevak, capital Karoo Ashevak, withdrawals Tuition revenue Extension revenue Depreciation expense, equipment Depreciation expense, professional library 34,500 2.750 0 6,800 234,000 94,500 207,650 77,500 O O 7,950 63,000 $ 18.900 103,500 34,500 2,750 0 6,800 234.000 94,500 Professional library Accumulated depreciation, professional library Equipment Accumulated depreciation, equipment Accounts payable Salarios payable Uneamed 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 207,650 77,500 0 0 211,000 0 49,000 0 14,500 11,700 $ 582,100 $ 582.100 3. If the adjustments were not recorded, calculate the over- or understatement of income. 4. Is it ethical to ignore adjusting entries? O Yes No
