Question

Required information

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Wells Technical Institute (WTI), a school owned by Tristana Wells, provides training to individuals who pay tuition directly to the school. WTI also offers training to groups in off-site locations. WTI initially records prepaid expenses and unearned revenues in balance sheet accounts. Its unadjusted trial balance as of December 31 follows along with descriptions of items a through h that require adjusting entries on December 31.
  
Additional Information Items

1. An analysis of WTI's insurance policies shows that $2,400 of coverage has expired.
2. An inventory count shows that teaching supplies costing $2,800 are available at year-end.
3. Annual depreciation on the equipment is $13,200.
4. Annual depreciation on the professional library is $7,200.
5. On September 1, WTI agreed to do five courses for a client for $2,500 each. Two courses will start immediately and finish before the end of the year. Three courses will not begin until next year. The client paid $12,500 cash in advance for all five courses on September 1, and WTI credited Unearned Training Fees.
6. On October 15, WTI agreed to teach a four-month class (beginning immediately) for an executive with payment due at the end of the class. At December 31, $7,500 of the tuition has been earned by WTI.
7. WTI's two employees are paid weekly. As of the end of the year, two days' salaries have accrued at the rate of $100 per day for each employee.
8. The balance in the Prepaid Rent account represents rent for December.
   

WELLS TECHNICAL INSTITUTE Unadjusted Trial Balance December 31
	Debit					Credit
Cash		$	34,000
Accounts receivable			0
Teaching supplies			8,000
Prepaid insurance			12,000
Prepaid rent			3,000
Professional library			35,000
Accumulated depreciation—Professional library							$	10,000
Equipment			80,000
Accumulated depreciation—Equipment								15,000
Accounts payable								26,000
Salaries payable								0
Unearned training fees								12,500
T. Wells, Capital								90,000
T. Wells, Withdrawals			50,000
Tuition fees earned								123,900
Training fees earned								40,000
Depreciation expense—Professional library			0
Depreciation expense—Equipment			0
Salaries expense			50,000
Insurance expense			0
Rent expense			33,000
Teaching supplies expense			0
Advertising expense			6,000
Utilities expense			6,400
Totals		$	317,400				$	317,400

2-a. Post the balance from the unadjusted trial balance and the adjusting entries in to the T-accounts.
2-b. Prepare an adjusted trial balance.

Answer 1

Transaction General Journal Insurance expense Prepaid insurance Debit Credit 2,400 2,400 5,200 5,200 Teaching supplies expense Teaching supplies 8000-2800 Depreciation expense-Equipment Accumulated depreciation Equipment c. 13,200 13,200 d. Depie 7,200 Depreciation expense-Professional library Accumulated depreciation Professional library 7,200 e. 5,000 Unearned training fees Training fees earned 5,000 (2500*2) 7,500 Accounts receivable Tuition fees earned 7,500 400 Salaries expense Salaries payable 400 (100*2*2) h. 3,000 Rent expense Prepaid rent 3,000

Part 2a Cash 34,000 Equipment 80,000 Unadj. Bal. Un adj. Bal. Adj. Bal. 34,000 Adj. Bal. 80,000 Accounts Receivable Accumulated Depreciation Un adj. Bal. Unadj. Bal. Equipment 15,000 13,200 7,500 Adj. Bal. L 7,500 Adj. Bal. 28, 200 Accounts Payable Unadj. Bal. Teaching Supplies 8,000 0b Un adj. Bal. 26,000 5.200 Adj. Bal. 2,800 Adj. Bal. 26,000 Salaries Payable Unadj. Bal. Prepaid Insurance 12,000 Ja Un adj. Bal. 2,400 Adj. Bal. 9,6001 600 Adj. Bal. Unearned Training Fees Unadj. Bal. Prepaid Rent 3,000 h Un adj. Bal. 12,500 3,000 5,000 Adj. Bal. o Adj. Bal. 7,500 T wells, capital Professional Library 35,000 Unadj. Bal. Un adj. Bal. 90,000 Adj. Bal. 35,000 Adi. Bal. 90,000 Accumulated Depreciation Unadj. Bal. Professional Library 10,000 7,200 T wells, with drawal 50,000 Un adj. Bal. Adj. Bal. 17,200 Adj. Bal. 50,000

Part 2b WELLS TECHNICAL INSTITUTE Adjusted Trial Balance December 31, Debit Credit 34000 7,500 2,800 9,600 35,000 17,200 80,000 Cash Accounts receivable Teaching supplies Prepaid insurance Prepaid rent o Professional library Accumulated depreciation-Professional library Equipment Accumulated depreciation Equipment Accounts payable Salaries payable Unearned training fees Twells, capital Twells, withdrawal Tuition fees earned Training fees earned Depreciation expense - Professional library Depreciation expense-Equipment Salaries expense Insurance expense Rent expense Teaching supplies expense Advertising expense Utilities expense Totals 28,200 26,000 400 7,500 90,000 50,000 131,400 45,000 7,200 13,200 50,400 2,400 36,000 5,200 6,000 6,400 345700 345700