Following is the unadjusted trial balance for Alonzo Institute as of December 31. 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.

A

B

C

1

ALONZO INSTITUTE Unadjusted Trial Balance December 31

2

Debit

Credit

3

Cash

$ 60,000

4

Accounts receivable

0

5

Teaching supplies

70,000

6

Prepaid insurance

19,000

7

Prepaid rent

3,800

8

Professional library

12,000

9

Accumulated depreciationProfessional library

$ 2,500

10

Equipment

40,000

11

Accumulated depreciationEquipment

20,000

12

Accounts payable

11,200

13

Salaries payable

0

14

Unearned training fees

28,600

15

C. Alonzo, Capital

71,500

16

C. Alonzo, Withdrawals

20,000

17

Tuition fees earned

129,200

18

Training fees earned

68,000

19

Depreciation expenseProfessional library

0

20

Depreciation expenseEquipment

0

21

Salaries expense

44,200

22

Insurance expense

0

23

Rent expense

29,600

24

Teaching supplies expense

0

25

Advertising expense

19,000

26

Utilities expense

13,400

27

Totals

$331,000

$331,000

Additional Information

a. An analysis of the Institutes 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.

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 two-month course (starting immediately) for

a client. The contract calls for a $14,300 monthly fee, and the client paid the two months fees in advance. When the cash was received, the Unearned Training Fees account was credited.

f. On October 15, the Institute agreed to teach a four-month class (beginning immediately) to an execu- tive with payment due at the end of the class. At December 31, $5,750 of the tuition has been earned by the Institute.

g. The Institutes only employee is paid weekly. As of the end of the year, three days salaries have 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 companys income statement and statement of owners equity for the year, and prepare its

balance sheet as of December 31. The C. Alonzo, Capital account balance was $71,500 on December 3 of the prior year