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.

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.

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ALONZO INSTITUTE Unadjusted Trial Balance December 31, 2018 Credit Debit 2 $ 60,000 Cash 4 Accounts recelvable 5 Teaching supplies 6 Prepald Insurance Prepald rent 8 Professional library 9 Accumulated depreclation-Professlonal library 10 Equipment 70,000 19.000 3,800 12,000 $ 2,500 40,000 11 Accumulated depreciation-Equipment 12 Accounts payable 12 Salarlos payablo 14 Unearned tralning fees 15 Common stock 16 Retalned earnings, December 31, 2017 17 Dividends 18 Tultion fees eamed 19 Training fees earned 20 Depreciation expense-Professional library 21 Depreclation expense-Equipment 22 Salarles oxpenso 23 Insurance expense 20,000 11,200 28,600 11,000 60,500 20,000 129,200 68,000 44,200 24 Rent expense 25 Teaching supplles expense 26 Advertisng expense 27 Utilities expense 29,600 19,000 13,400 $ 331,000 28 Totals $331,000