(Basic Accounting)

The unadjusted trial balance and the adjustment data for Robin Training Institute are given below along with adjusting entry information.

Robin Training Institute Unadjusted Trial Balance as at 31 August 2021
	RM	RM
Cash	58,000
Accounts receivable	59,000
Prepaid insurance	12,000
Equipment	8,000
Accumulated depreciation for equipment		2,000
Buildings	57,500
Accumulated depreciation for buildings		17,500
Land	55,000
Unearned rent		16,000
Bank loan		50,000
Capital		115,600
Fees earned		97,400
Wages	32,000
Utilities	8,000
Repairs and maintenance	5,000
Interest expense	4,000
Total	298,500	298,500

Additional information:

1. The Prepaid Insurance account consists of a payment for one year policy. An analysis of the insurance invoice indicates that one half of the policy has expired by the end of the 31 August year-end.
2. A cash payment for space sublet for 8 months was received on 1 March and was credited to Unearned Rent.
3. Accrued interest expense on the loan of RM1,000 has been incurred but not paid.

Required:

If these adjustments are not recorded,

1. Show and explain the impact on net income with calculation without the adjustments and with the adjustments. (11 marks)
2. Explain the accounting principles that are being violated if the adjustments are not made. (4 marks)