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:

1. An analysis of the companys policies shows that $1,210 of insurance coverage has expired.
2. An inventory shows that teaching supplies costing $410 are on hand at the end of the year.
3. The estimated annual depreciation on the equipment is $7,500
4. The estimated annual depreciation on the professional library is $4,320.
5. 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 $810, and the client paid the first five months' revenue in advance. When the cash was received, the Unearned Extension Revenue account was credited.
6. On October 15, the school agreed to teach a four-month class for an individual for $1,160 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.
7. 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.
8. The balance in the Prepaid Rent account represents the rent for three months: December, January, and February.

PACRIM CAREERS Trial Balances December 31, 2020
	Unadjusted										Adjusted
	Trial Balance							Adjustments			Trial Balance
Account		Dr.				Cr.		Dr.	Cr.		Dr.	Cr.
Cash	$	17,600
Accounts receivable		0
Teaching supplies		6,100
Prepaid insurance		1,360
Prepaid rent		6,600
Professional library		57,600
Accumulated depreciation, professional library					$	17,280
Equipment		90,000
Accumulated depreciation, equipment						30,000
Accounts payable						2,300
Salaries payable						0
Unearned extension revenue						5,900
Karoo Ashevak, capital						225,000
Karoo Ashevak, withdrawals		90,000
Tuition revenue						186,680
Extension revenue						68,500
Depreciation expense, equipment		0
Depreciation expense, professional library		0
Salaries expense		202,000
Insurance expense		0
Rent expense		40,000
Teaching supplies expense		0
Advertising expense		13,600
Utilities expense		10,800
Totals	$	535,660			$	535,660

Required: 1. Prepare the necessary annual adjusting journal entries at December 31, 2020, based on (a) to (h) above.

Analysis Component: 2. Complete the adjusted trial balance using the information in (a) through (h) above.

3. If the adjustments were not recorded, calculate the over- or understatement of income.

4. Is it ethical to ignore adjusting entries? multiple choice

• No

• Yes

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