Clark Technical Institute (CTI), a school owned by Jean Clark, provides training to individuals who pay tuition directly to the school. CTI also offers training to groups in off-site locations. Its unadjusted trial balance as of December 31, 2022, is found on the trial balance tab. CTI initially records prepaid expenses and unearned revenues in balance sheet accounts. Descriptions of items a through h that require adjusting entries on December 31 follow. a. An analysis of CTI's insurance policies shows that $2,550 of coverage has expired. b. An inventory count shows that teaching supplies costing $2,920 are available at year-end. c. Annual depreciation on the equipment is $7,000. d. Annual depreciation on the professional library is $10,200. e. On November 1, CTI agreed to do a special six-month course (starting immediately) for a client. The contract calls for a monthly fee of $3,000, and the client paid the first five months' fees in advance. When the cash was received, the Unearned Training Fees account was credited. f. On October 15, CTI agreed to teach a four-month class (beginning immediately) for an executive with payment due at the end of the class. At December 31, $3,600 of the tuition has been earned by CTI. g. CTI's two employees are paid weekly. As of the end of the year, two days' salaries have accrued at the rate of $160 per day for each employee. h. The balance in the Prepaid Rent account represents rent for December. Requirement General Journal General Ledger Trial Balance Income Statement St of Retained Earnings Balance Sheet Impact on income - - General Journal tab For transactions a-h, review the unadjusted balance and prepare the adjusting entry necessary to correctly report the revenue earned or the expense incurred. After adjusting the accounts, review the financial statements for accuracy. General Ledger tab Each journal entry is posted automatically to the general ledger. Use the drop-down button to view the unadjusted or adjusted balances. Trial Balance tab You may view either the unadjusted or adjusted trial balance by choosing from the dropdown box below. Your choice will determine the reported values on the financial statement tabs. Income Statement tab - Use the drop-downs to select the accounts properly included on the income statement. The unadjusted or adjusted balances will appear for each account, based on your selection. Statement of Retained earnings tab - The unadjusted or adjusted balances will appear for each account, based on your selection. Balance Sheet tab - Use the drop-downs to select the accounts properly included on the balance sheet. The unadjusted or adjusted balances will appear for each account, based on your selection. Impact on Income tab - For each adjustment, indicate the income statement and balance sheet account affected, and the impact on net income. If an adjustment caused net income to decrease, enter the amount as a negative value. Net income before adjustments can be found on the income statement tab. (Hint: Select unadjusted on the dropdown.) No Date Account Title Debit Credit 1 1 Dec 31 Insurance expense 2,550 Prepaid insurance 2,550 2 Dec 31 2,310 X Teaching supplies expense Teaching supplies 2,310 X 3 Dec 31 7,000 Depreciation expense - Equipment Accumulated depreciation - Equipment 7,000 4 Dec 31 10,200 > Depreciation expense - Professional library Accumulated depreciation - Professional library 10,200 5 Dec 31 6,000 Unearned training fees Training fees earned 00 6,000 6 Dec 31 3,600 > Accounts receivable Tuition fees earned 3,600 7 Dec 31 640 Salaries expense Salaries payable 640 8 Dec 31 Rent expense 3,600 Prepaid rent > 3,600 General Ledger Account Cash Accounts receivable No. Date Debit Credit Balance No. Date Debit Credit Balance Dec 31 44,275 Dec 31 0 6 Dec 31 3,600 3,600 Prepaid insurance Teaching supplies Debit Credit No. No. Date Debit Credit Date Dec 31 Balance 8,150 5,840 Dec 31 Balance 12.750 10.200 2 Dec 31 2,310 1 Dec 31 2,550 Prepaid rent Professional library No. Date Debit Credit Balance No. Date Debit Credit Balance 51,000 Dec 31 Dec 31 3,600 0 8 Dec 31 3,600 Accumulated depreciation - Professional library Equipment No. Date Debit Credit No. Date Debit Credit Balance Balance 20,400 30,600 Dec 31 Dec 31 Dec 31 70,000 4 10,200 Accumulated depreciation - Equipment Accounts payable Debit Credit No. Date Debit Credit Balance No. Date Balance 29,600 Dec 31 Dec 31 14,000 21,000 3 Dec 31 7,000 Salaries payable Unearned training fees No. Date Debit Credit Balance No. Date Debit Credit Dec 31 0 Dec 31 Dec 31 Balance 15,000 9,000 * 7 Dec 31 640 640 5 6,000 Common stock Retained earnings Debit Credit No. Date Debit Credit Balance No. Date Balance Dec 31 11,000 Dec 31 85,000 Dividends Tuition fees earned No. Date Debit Credit No. Date Debit Credit Balance Balance 50,900 Dec 31 Dec 31 127,000 130,600 6 Dec 31 3,600 Training fees earned Depreciation expense - Professional library No. Date Debit Credit Balance No. Date Debit Credit Balance Dec 31 Dec 31 41,500 47,500 Dec 31 Dec 31 5 6,000 4 10,200 10,200 Depreciation expense - Equipment Salaries expense No. Debit Credit Balance No. Date Debit Credit Date Dec 31 Dec 31 0 Dec 31 Balance 50,600 51,240 3 7,000 7,000 7 Dec 31 640 Insurance expense Rent expense No. Date Debit Credit Balance No. Date Debit Credit Dec 31 0 Dec 31 Dec 31 Balance 39,600 43,200 1 Dec 31 2,550 2,550 8 3,600 Depreciation expense - Equipment Salaries expense No. Date Debit Credit Balance No. Date Debit Credit Balance Dec 31 0 Dec 31 50,600 51,240 3 Dec 31 7,000 7,000 7 Dec 31 640 Insurance expense Rent expense No. Date Debit Credit Balance No. Date Debit Credit Balance Dec 31 0 Dec 31 39,600 43,200 Dec 31 2,550 2,550 8 Dec 31 3,600 Teaching supplies expense Advertising expense No. Date Debit Credit Balance No. Date Debit Credit Balance Dec 31 0 Dec 31 6,075 2 Dec 31 2,310 2,310 Utilities expense No. Date Debit Credit Balance Dec 31 6,550 Clark Technical Institute Trial Balance December 31, 2022 Account Title Debit Credit $ 44,275 3,600 5,840 10,200 51,000 30,600 70,000 21,000 29,600 640 9,000 Cash Accounts receivable Teaching supplies Prepaid insurance Professional library Accumulated depreciation - Professional library Equipment Accumulated depreciation - Equipment Accounts payable Salaries payable Unearned training fees Common stock Retained earnings Dividends Tuition fees earned Training fees earned Depreciation expense - Professional library Depreciation expense - Equipment Salaries expense Insurance expense Rent expense Teaching supplies expense Advertising expense 11,000 85,000 50,900 130,600 47,500 10,200 7,000 51,240 2,550 43,200 2,310 6,075 Insurance expense 2,550 43,200 2,310 Rent expense Teaching supplies expense Advertising expense Utilities expense 6,075 6,550 Total $ 364,940 $ 364,940 Adjusted Clark Technical Institute Income Statement For Year Ended December 31, 2022 Revenues Tuition fees earned 130,600 Training fees earned 47,500 0 Total revenues $ 178,100 T 10,200 - Expenses Depreciation expense - Professional library Depreciation expense - Equipment Salaries expense Insurance expense Rent expense Teaching supplies expense Advertising expense 1 1 1 1 t tt 7,000 51,240 2,550 43,200 2,310 6,075 6,550 Utilities expense 0 0 Total expenses Net income 129,125 48,975 $ Adjusted Clark Technical Institute Statement of Retained Earnings For Year Ended December 31, 2022 Retained earnings, December 31, 2022 Add: Net income 85,000 Less: Dividends 48,975 (50,900) 83,075 Retained earnings, December 31, 2022 $ Clark Technical Institute Balance Sheet December 31, 2022 Assets Current assets Cash Accounts receivable Teaching supplies Prepaid insurance Prepaid rent OOOOO ttt 44,275 3,600 5,840 10,200 0 0 Total current assets $ 63,915 Plant assets 51,000 (30,600) 20,400 Professional library Accumulated depreciation - Professional library Professional library, net Equipment Accumulated depreciation - Equipment Equipment, net Total plant assets Total assets 70,000 (21,000) 49,000 69,400 133,315 $ Liabilities Current liabilities Accounts payable 29,600 640 Salaries payable Unearned training fees 9,000 0 Total liabilities $ 39,240 Equity Common stock 11,000 83,075 Retained earnings Total equity Total Liabilities & Equity 94,075 133,315 $ Adjusted Impact on net income 2,550 X 2,310 (7,000) (10,200) Account affecting the: Adjusting entry related to: Income statement Balance Sheet a. Insurance Insurance expense Prepaid insurance b. Teaching supplies Teaching supplies expense Teaching supplies c. Depreciation - Depreciation expense - Accumulated depreciation - equipment Equipment Equipment Depreciation expense Accumulated depreciation - d. Depreciation - library Professional library Professional library e. Training fees Training fees earned Unearned training fees f. Tuition Tuition fees earned Accounts receivable g. Salaries Salaries expense Salaries payable h. Rent Rent expense Prepaid rent Total impact on income due to adjustments Net income before adjustments Net income after adjustments Had the adjustments not been prepared, income would have been understated by 47,500 X 136,600 640 X $ 3,600 176,000 48,975 127,025 $ 61.44%