Preparing adjusting entries, adjusted trial balance, and financial statements Following is the unadjusted trial balance for Augustus Institute as of December 31, 2008, which initially records prepaid expenses in balance sheet accounts. The Institute provides one-on-one training to individuals who pay tuition directly to the business and offers extension training to groups in offsite locations. Shown after the trial balance are items a throufg thha t require adjusting entries as of December 31, 2008.

Additional Information

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 2008.
c. Annual depreciation on the equipment is \($5,000.\)

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

e. The Institute’s only employee is paid weekly. As of the end of the year, three days’ wages have accrued at the rate of \($150\) per day.

f. 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 f, 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 Augustus Institute’s income statement and statement of owner’s equity for the year 2008, and prepare its balance sheet as of December 31, 2008.

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48 Cat Vew sert Pamat Look Data accounting Window * 100 A 30 BJU S %, AUGUSTUS INSTITUTE Unadjusted Trial Balance December 31, 2008 3 Cash 4 Accounts receivable Teaching supplies 8 Prepaid insurance 7 Prepaid rent Professional library 10 Equipment 1 Accumulated depreciation-Equipment 12 Accounts payable Debit $ 60,000 Credit 0 70,000 19.000 3,800 12,000 Accumulated depreciation-Professional library $ 2,500 40,000 20,000 39,800 13 Salaries payable 0 14 C. Augustus, Capital 15 C. Augustus, Withdrawals 16 Tuition fees earned. 71,500 20,000 129,200 19 Depreciation expense Equipment Training fees earned 18 Depreciation expense-Professional library 20 Salaries expense 21 Insurance expense 22 Rent expense 23 Teaching supplies expense 24 Advertising expense 25 Utilities expense 26 Totals 27 68,000 DO 0 0 44,200 0 29,600 0 19,000 13,400 $ 331,000 $ 331,000