The Unadjusted Trial Balance and the Adjustment Data for Porter

question 163

Essay

The unadjusted trial balance and the adjustment data for Porter Business Institute are given below along with adjusting entry information. What is the impact on net income if these adjustments are not recorded? Show the calculation for net income without the adjustments and net income with the adjustments. Which one gives the most accurate net income? Which accounting principles are being violated if the adjustments are not made?
$\begin{array}{c}\text {Porter Business Institute }\\\text {Unadjusted Trial Balance }\\\text {December 31}\\\text { (In millions)}\\\begin{array}{l|l||l}\hline \text { Cash........ } & \$ 58,000 & \\\hline \text { Accounts receivable .............. } & 59,000 & \\\hline \text { Prepaid insurance ............. } & 12,000 & \\\hline \text { Equipment ... } & 8,000 & \\\hline \text { Accumulated depreciation-equipment .......... } & & \$ 2,000 \\\hline \text { Buildings..... } & 57,500 & \\\hline \text { Accumulated depreciation-buildings............. } & & 17,500\end{array}\end{array}$

$$\begin{array} { l | l | | l } \hline \text { Land } & 55,000 & \\\hline \text { Unearned rent. } & & 16,000 \\\hline \text { Long-term notes payable } \ldots \ldots \ldots & & 50,000 \\\hline \text { Porter, Capital } & & 115,600 \\\hline \text { Tuition fees earned } \ldots \ldots \ldots \ldots & & 74,000 \\\hline \text { Training fees earned } \ldots \ldots \ldots & & 23,400 \\\hline \text { Wages expense } \ldots \ldots \ldots \ldots \ldots & 32,000 & \\\hline \text { Utilities expense } \ldots \ldots \ldots \ldots & 8,000 & \\\hline \text { Property taxes expense } \ldots \ldots & 5,000 & \\\hline \text { Interest expense } \ldots \ldots \ldots \ldots \ldots & 4,000 & \\\hline \text { Totals } \ldots \ldots \ldots & \$ 298,500 & \$ 298,500 \\\hline\end{array}$$ Additional information items:
a. The Prepaid Insurance account consists of a payment for a 1 year policy. An analysis of the insurance invoice indicates that one half of the policy has expired by the end of the December 31 year-end.
b. A cash payment for space sublet for 8 months was received on July 1 and was credited to Unearned Rent.
c. Accrued interest expense on the note payable of $1,000 has been incurred but not paid.

Recognize the impact of U.S. self-sufficiency and export-import dynamics through history.

Analyze Joseph Stiglitz's criticisms of the IMF policies and their implications.

Understand the components and significance of net exports in the national economy.

Recognize the arguments for and against globalization and its effects on economies and labor.

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