Following is the unadjusted trial balance for Alonzo Institute as of
December 31, 2015, which initially records prepaid expenses and unearned
revenues 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 off-site locations. Shown after the trial balance are
items a through h that require adjusting entries as of December
31, 2015.
ALONZO
INSTITUTE
Unadjusted
Trial Balance
December 31,
2015
Debit Credit
Cash 60,000
Accounts
Receivable 0
Teaching
Supplies 70,000
Prepaid
Insurance 19,000
Prepaid Rent 3,800
Professional
Library 12,000
Accumulated
Depreciation - Professional Library 2,500
Equipment 40,000
Accumulated
Depreciation – Equipment 20,000
Accounts
Payable 11,200
Salaries
Payable 0
Unearned
Training Fees 28,600
Common stock 11,000
Retained
earnings 60,500
Dividends 20,000
Tuition Fees
Earned 129,200
Training Fees
Earned 68,000
Depreciation
Expense - Professional Library 0
Depreciation
Expense – Equipment 0
Salaries
Expense 44,200
Insurance
Expense 0
Rent Expense 29,600
Teaching
Supplies Expense 0
Advertising
Expense 19,000
Utilities
Expense 13,400
Totals $331,000
$331,000
Additional Information Items
1. An analysis of the institute’s insurance policies shows that $9,500 of
coverage has expired.
2. An inventory count shows that teaching supplies costing $20,000 are
available at year-end 2015.
3. Annual depreciation on the equipment is $5,000.
4. Annual depreciation on the professional library is $2,400.
5. 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 month’s fees in advance. When the cash
was received, the unearned Training Fees account was credited. The last two
month’s fees will be recorded when collected in 2015.
6. 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.
7. The institute’s only employee is paid weekly. As of the end of the
year, three day’s salaries have accrued at a rate of $150 per day.
8. 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. 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 the statement of retained
earnings for the year 2015, and prepare its balance sheet as of December 31,
2015.
TUTORIAL PREVIEW
ALONZO INSTITUTE
Income statement
for the year ended 12/31/2015
|
Revenues:
|
||
|
Tuition fees earned
|
134,950
|
|
|
Training fees earned
|
82,300
|
|
|
Total revenues
|
217,250
|
Solution file name: Alonzo Institute.xls File type: .xls PRICE: $20
