Question

Problem 3-3A Preparing adjusting entries, adjusted trial balance, and financial statements LO P1, P2, P3

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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. Its unadjusted trial balance as of December 31, 2017, follows. WTI initially records prepaid expenses and unearned revenues in balance sheet accounts. Descriptions of items a through h that require adjusting entries on December 31, 2017, follow.
  
Additional Information Items

1. An analysis of WTI's insurance policies shows that $3,864 of coverage has expired.
2. An inventory count shows that teaching supplies costing $3,349 are available at year-end 2017.
3. Annual depreciation on the equipment is $15,458.
4. Annual depreciation on the professional library is $7,729.
5. On November 1, WTI agreed to do a special six-month course (starting immediately) for a client. The contract calls for a monthly fee of $2,900, and the client paid the first five months' fees in advance. When the cash was received, the Unearned Training Fees account was credited. The fee for the sixth month will be recorded when it is collected in 2018.
6. On October 15, WTI agreed to teach a four-month class (beginning immediately) for an individual for $4,700 tuition per month payable at the end of the class. The class started on October 15, but no payment has yet been received. (WTI's accruals are applied to the nearest half-month; for example, October recognizes one-half month accrual.)
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, 2017
	Debit			Credit
Cash	$	27,245
Accounts receivable		0
Teaching supplies		10,478
Prepaid insurance		15,719
Prepaid rent		2,097
Professional library		31,436
Accumulated depreciation—Professional library				$	9,432
Equipment		73,338
Accumulated depreciation—Equipment					16,768
Accounts payable					34,749
Salaries payable					0
Unearned training fees					14,500
Common stock					13,000
Retained earnings					53,646
Dividends		41,916
Tuition fees earned					106,885
Training fees earned					39,820
Depreciation expense—Professional library		0
Depreciation expense—Equipment		0
Salaries expense		50,300
Insurance expense		0
Rent expense		23,067
Teaching supplies expense		0
Advertising expense		7,336
Utilities expense		5,868
Totals	$	288,800		$	288,800

Problem 3-3A Part 2

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

Credit Wells Technical Institute T Accounts Date Debit Date Accounts Receivable Unadj Bal $ 31-Dec $ 11,750 Date Debit Date Credit Accum. Depr. - Professional Library Unadj Bal $ 9,432 31-Dec $ 7,729 Adj Bal $ 11,750 Teaching Supplies $ 10,478 31-Dec $ Adj Bal $17,161 Accum. Depr.- Equipment Unadj Bal $ 16,768 31-Dec $ 15,458 Unadj Bal 7,129 Adj Bal $ 3,349 Prepaid Insrance 15,719 31-Dec $ Adj Bal $32,226 Salaries Payable Unadj Bal $ . 31-Dec $ 400 Unadj Bal $ 3,864 Adj Bal $ 11,855 Prepaid Rent $ 2,097 31-Dec $ Adj Bal $ 400 Unearned Training Fees 31-Dec $ 5,800 Unadj Bal $ 14,500 Unadj Bal 2,097 Adj Bal $ . Tuition fees earned Unadj Bal $ 106,885 31-Dec $ 11,750 Adj Bal $ 8,700 Training fees earned Unadj Bal $ 39,820 31-Dec $ 5,800 Adj Bal $ 118,635 Depreciation expense-Professional Library Unadj Bal $ 31-Dec $ 7,729 Adj Bal $ 45,620 Depreciation expense-Equipment Unadj Bal $ 31-Dec $ 15,458 Adj Bal $ 7,729 Salaries expense Unadj Bal $ 50,300 31-Dec $ 400 Adj Bal $15,458 Insurance expense Unadj Bal $ 31-Dec $ 3,864 Adj Bal $ 50,700 Rent expense Unadj Bal $ 23,067 31-Dec $ 2,097 Adj Bal $ 3,864 Teaching Supplies expense Unadj Bal $ 31-Dec $ 7,129 Adj Bal $ 25,164 Adj Bal $ 7,129

Adjusted TB Debit Credit 27,245 11,750 3,349 11,855 31,436 17,161 73,338 Wells Technical Institute Account Names Cash Accounts Receivable Teaching Supplies Prepaid Insurance Prepaid Rent Professional Library Accumulated Depreciation-Professional Library Equipment Accumulated Depreciation-Equipment Accounts Payable Salaries Payable Unearned Training Fees Common Stock Retained Earnings Dividends Tuition fees eanred Training fees eanred Depreciation expense- Prof Library Depreciation expense- Equipment Salaries expense Insurance expense Rent expense Teaching Supplies expense Advertising expense Utilities expense Totals 32,226 34,749 400 8,700 13,000 53,646 41,916 118,635 45,620 7,729 15,458 50,700 3,864 25,164 7,129 7,336 5,868 324,137 324,137

WTI Wells Technical Institute Journal entries No. Account a Insurance expense Prepaid Insurance Credit Calculation Debit $ 3,864 $ 3,864 b $ 7,129 =10,478-3,349 Teaching Supplies expense Teaching Supplies $ 7,129 с $ 15,458 Depreciation expense-Equipment Accumulated Depreciation Equipment $ 15,458 d $ 7,729 Depreciation expense- Prof Library Accumulated Depreciation-Professional Library $ 7,729 $ 5,800 =2,900*2 Unearned Training Fees Training fees eanred $ 5,800 $ 11,750 -4,700*2.5 Accounts Receivable Tuition fees eanred $ 11,750 g $ 400 = 100*2*2 Salaries expense Salaries Payable $ 400 $ 2,097 Rent expense Prepaid Rent $ 2,097