Following is the unadjusted trial balance for Augustus Institute as of December 31, 2010...

Following is the unadjusted trial balance for Augustus Institute as of December 31, 2010. The Institute provides ne-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 f that require adjusting entries as of December 31, 2010.

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 2010.

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’ salaries have accrued at the rate of $150 per day.

f. The balance in the Prepaid Rent account represents rent for December.

Required

1. Using Exhibit 5.11 as a guide, create a seven-column sheet with the following headings:

2. Enter the account titles and balances in the unadjusted trial balance columns onto your sheet.

3. Prepare the necessary adjusting journal entries for items a through f and record them in the adjustments column. Assume that adjusting entries are made only at year end.

4. Compute adjusted account balances and enter the balances in the adjusted trial balance columns.

5. Prepare Augustus Institute’s income statement and statement of owner’s equity for the year 2010, and prepare its balance sheet as of December 31, 2010. The owner made no additional investments during the year.