Identification and Preparation of Adjusting Entries}

Dance Inc. provides ballet, tap, and jazz dancing instruction to promising young dancers. Dance began operations in January 2019 and is preparing its monthly financial statements. The following items describe Dance's transactions in January 2019:

a. Dance requires that dance instruction be paid in advance-either monthly or quarterly. On January 1, Dance received \(\$ 3,275\) for dance instruction to be provided during 2019 .

b. On January 31, Dance noted that \(\$ 450\) of dance instruction revenue is still unearned.

c. On January 20, Dance's hourly employees were paid \(\$ 1,350\) for work performed in January.

d. Dance's insurance policy requires semi-annual premium payments. Dance paid the \(\$ 4,500\) insurance policy, which covered the first half of 2019, in December 2018.

e. When there are no scheduled dance classes, Dance rents its studio for birthday parties for \(\$ 100\) per two-hour party. Three birthday parties were held during January. Dance will not bill the parents until February.

f. Dance purchased \(\$ 250\) of office supplies on January 10 .

g. On January 31, Dance determined that office supplies of \(\$ 75\) were unused.

h. Dance received a January utility bill for \(\$ 685\). The bill will not be paid until it is due in February.

\section*{Required:}

1. Identify whether each entry is an adjusting entry or a regular journal entry. If the entry is an adjusting entry, identify it as an accrued revenue, accrued expense, unearned revenue, or prepaid expense.

2. Prepare the journal entries necessary to record the above transactions.

\section*{Problem