226.On November 1 of the current year, Salinger Company paid $9,600 cash for a one-year insurance policy that took effect on that day. On the date of the payment, Salinger recorded the following entry:
Nov. 01Insurance Expense9,600
Cash9,600
227.The unadjusted trial balance and the adjustment data for Porter Business Institute, Inc. 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?
Porter Business Institute, Inc.
Unadjusted Trial Balance
December 31
(in millions)
Cash$58,000
Accounts receivable59,000
Prepaid insurance12,000
Equipment8,000
Accumulated depreciation—equipment$2,000
Buildings57,500
Accumulated depreciation—buildings17,500
Land55,000
Unearned rent16,000
Long-term notes payable50,000
Common stock1,000
Retained earnings114,600
Tuition fees earned74,000
Training fees earned23,400
Wages expense32,000
Utilities expense8,000
Property taxes expense5,000
Interest expense4,000
Totals$298,500$298,500