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 $4,129 of coverage has expired.
  2. An inventory count shows that teaching supplies costing $3,578 are available at year-end.
  3. Annual depreciation on the equipment is $16,515.
  4. Annual depreciation on the professional library is $8,258.
  5. On September 1, WTI agreed to do five courses for a client for $2,200 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 $11,000 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, $14,800 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 $ 28,000
Accounts receivable 0
Teaching supplies 10,768
Prepaid insurance 16,155
Prepaid rent 2,155
Professional library 32,307
Accumulated depreciation—Professional library $ 9,693
Equipment 98,000
Accumulated depreciation—Equipment 17,232
Accounts payable 22,000
Salaries payable 0
Unearned training fees 11,000
Common stock 23,738
Retained earnings 85,000
Dividends 43,078
Tuition fees earned 109,846
Training fees earned 40,923
Depreciation expense—Professional library 0
Depreciation expense—Equipment 0
Salaries expense 51,694
Insurance expense 0
Rent expense 23,705
Teaching supplies expense 0
Advertising expense 7,539
Utilities expense 6,031
Totals $ 319,432 $ 319,432

Required:
1. Prepare the necessary adjusting journal entries for items a through h. Assume that adjusting entries are made only at year-end.

Journal entry worksheet 2 3 4 5 6 7 8 An analysis of WTIs insurance policies shows that $4,129 of coverage has expired. Note

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Answer #1

Adjusting entry

No Account and explanation Debit Credit
1 Insurance expense 4129
Prepaid insurance 4129
2 Teaching Supplies expense (10768-3578) 7190
Teaching Supplies 7190
3 Depreciation expense 16515
Accumulated depreciation-equipment 16515
4 Depreciation expense 8258
Accumulated depreciation-Professional library 8258
5 Unearned training fees 4400
Training fees earned 4400
6 Account receivable 14800
Tuition fees earned 14800
7 Salaries expense 400
Salaries payable 400
8 Rent expense 2155
Prepaid rent 2155
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