Question

CHECK FIGURE: 2. Adjusted Trial Balance debits ? $572,520 Problem 3-6A Adjusting entries; adjusted trial balance LO4,6 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, 2014, year-end follows: a. An analysis of the company’s policies shows that $1,250 of insurance coverage has expired. b. An inventory shows that teaching supplies costing $450 are on hand at the end of the year. c. The estimated annual depreciation on the equipment is $8,000. d. The estimated annual depreciation on the professional library is $4,500. 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 $950, and the client paid the first five months’ fees in advance. When the cash was received, the Unearned Extension Fees account was credited. Home PacRim Careers Trial Balances.xls Insert Page Layout Formulas Data Review View P18 fx A B C D E F G 1 PacRim Careers Trial Balances December 31, 2014 2 3 4 Unadjusted Adjusted 5 Trial Balance Adjustments Trial Balance 6 Account Dr. Cr. Dr. Cr. Dr. Cr. 7 Cash $ 18,000 8 Accounts receivable -0- 9 Teaching supplies 6,500 10 Prepaid insurance 1,400 11 Prepaid rent 7,200 12 Professional library 60,000 13 Accumulated depreciation, professional library $ 18,000 14 Equipment 96,000 15 Accumulated depreciation, equipment 32,000 16 Accounts payable 2,500 17 Salaries payable -0- 18 Unearned extension fees 6,300 19 Karoo Ashevak, capital 229,000 20 Karoo Ashevak, withdrawals 92,000 21 Tuition fees earned 196,000 22 Extension fees earned 72,500 23 Depreciation expense, equipment -0- 24 Depreciation expense, professional library -0- 25 Salaries expense 206,000 26 Insurance expense -0- 27 Rent expense 44,000 28 Teaching supplies expense -0- 29 Advertising expense 14,000 30 Utilities expense 11,200 31 Totals $ 556,300 $ 556,300 APTER 3 Adjusting Accounts for Financial Statements 165 Help Me SOLVE IT f. On October 15, the school agreed to teach a four-month class for an individual for $1,200 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 $120 per day for each employee. h. The balance in the Prepaid Rent account represents the rent for three months: December, January, and February. Required 1. PreparethenecessaryannualadjustingjournalentriesatDecember31,2014,basedon(a)to(h)above. Analysis Component: 2. Refer to the format presented in Exhibit 3.22 and 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?

Answer 1