Following is the unadjusted trial balance for Alonzo Institute as of December 31, 2018. The Institute provides

Question:

Following is the unadjusted trial balance for Alonzo Institute as of December 31, 2018. The Institute provides one-on-one training to individuals who pay tuition directly to the business and offers extension training to groups in off-site locations. Shown after the trial balance are items a through h that require adjusting entries as of December 31, 2018.

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Additional Information Items

a. An analysis of the Institute?s insurance policies shows that $9,500 of coverage has expired.

b. An inventory count shows that teaching supplies costing $20,000 are available at year-end 2018.

c. Annual depreciation on the equipment is $5,000.

d. Annual depreciation on the professional library is $2,400.

e. On November 1, the Institute agreed to do a special five-month course (starting immediately) for a client. The contract calls for a $14,300 monthly fee, and the client paid the first two months? fees in advance. When the cash was received, the Unearned Training Fees account was credited. The last three months? fees will be recorded when collected in 2019.

f. On October 15, the Institute agreed to teach a four-month class (beginning immediately) to an individual for $2,300 tuition per month payable at the end of the class. The class started on October 15, but no payment has yet been received. (The Institute?s accruals are applied to the nearest half-month; for example, October recognizes one-half-month accrual.)

g. The Institute?s only employee is paid weekly. As of the end of the year, three days? salary has accrued at the rate of $150 per day.

h. The balance in the Prepaid Rent account represents rent for December.

Required

1. Prepare T-accounts (representing the ledger) with balances from the unadjusted trial balance.

2. Prepare the necessary adjusting journal entries for items a through h, and post them to the T-accounts. Assume that adjusting entries are made only at year-end.

3. Update balances in the T-accounts for the adjusting entries and prepare an adjusted trial balance.

4. Prepare the company?s income statement and statement of retained earnings for the year 2018, and prepare its balance sheet as of December 31, 2018.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
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