Question

Problem 3-3A Preparing adjusting entries, adjusted trial balance, and financial statements LO P1, P2, P3 (The following information applies to the questions displayed below.) 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, 2018 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, 2018, follow. Additional Information Items a. An analysis of WTI's Insurance policies shows that $3.468 of coverage has expired. b. An inventory count shows that teaching supplies costing $3.006 are available at year end 2018. c. Annual depreciation on the equipment is $13,871. d. Annual depreciation on the professional library is $6,936, e. 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 $2,800, 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 2019 f. On October 15, WTI agreed to teach a four-month class (beginning immediately) for an individual for $4,019 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.) g. 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. h. The balance in the Prepaid Rent account represents rent for December

Answer 1

Training Fees Earned Date Account Debit 31-Dec-18 Balance 31-Dec-18 Unearned Training Fees Credit 40,923.00 5,600.00 Balance 40,923.00 46,523.00 Depreciation - Professional Library Date Account Debit 31-Dec-18 Accumulated Depreciation- Professional 6,936.00 Credit Balance 6,936.00 Depreciation- Equipment Date Account Debit 31-Dec-18 Accumulated Depreciation- Equipment 13,781.00 Credit Balance 13,781.00 Credit Date Account 31-Dec-18 Balance 31-Dec-18 Salaries Payable Salaries Expense Debit 51,694.00 400.00 Balance 51,694.00 52,094.00 Insurance Expense Debit 3,468.00 Date Account 31-Dec-18 Prepaid Insurance Credit Balance 3,468.00 Credit Date Account 31-Dec-18 Balance 31-Dec-18 Prepaid Rent Rent Expense Debit 23,705.00 2,155.00 Balance 23,705.00 25,860.00 Teaching Supplies Expense Date Account Debit 31-Dec-18 Teaching Supplies Expense 7,762.00 Credit Balance 7,762.00 Advertising Expense Debit 7,539.00 Date Account 31-Dec-18 Balance Credit Balance 7,539.00 Utilities Expense Debit 6,031.00 Date Account 31-Dec-18 Balance Credit Balance 6,031.00 Remarks Unadjusted Credit Adjustments Debit Credit Adjusted Debit Credit 28,000.00 10,047.50 3,006.00 12,687.00 10,047.50 7,762.00 3,468.00 2,155.00 $ 4,019 per month. Receivable from 15th October i.e. 2.5 months till 31st December. So $ 4,019*2.5= $ 10,047.50. Supplies on hand at year-end, $3,006. So $ 10,768- $ 3,006= $ 7.7762 consumed. $ 3,468 prepaid insurance is expired. Whole Prepaid Rent is for December. 32,307.00 9,693.00 6,936.00 16,629.00 Depreciation on Professional Library is $ 6,936. 75,368.00 13,781.00 17,232.00 36,613.00 400.00 Adjusted Trial Balance Account Titles Debit Cash 28,000.00 Accounts Receivable Teaching Supplies 10,768.00 Prepaid Insurance 16,155.00 Prepaid Rent 2,155.00 Professional Library 32,307.00 Accumulated Depreciation- Professional Library Equipment 75,368.00 Accumulated Depreciation- Equipment Accounts Payable Salaries Payable Unearned Training Fees Common Stock Retained Earnings Dividends 43,078.00 Tuition Fees Earned Training Fees Earned Depreciation - Professional Library Depreciation- Equipment Salaries Expense 51,694.00 Insurance Expense Rent Expense 23,705.00 Teaching Supplies Expense Advertising Expense 7,539.00 Utilities Expense 6,031.00 Total 296,800.00 31,013.00 Depreciation on equipment $ 13,781. 36,613.00 400.00 $ 100 payable each day for 2 employee i.e. $ 100*2days*2employees= $ 400. 8,400.00 Training fees earned at $ 2,800 per month from November to December i.e. $ 2,800*2= $ 5,600. 12,000.00 56,493.00 5,600.00 14,000.00 12,000.00 56,493.00 43,078.00 109,846.00 40,923.00 10,047.50 5,600.00 6,936.00 13,781.00 400.00 3,468.00 2,155.00 7,762.00 6,936.00 13,781.00 52,094.00 3,468.00 25,860.00 7,762.00 7,539.00 6,031.00 327,964.50 119,893.50 $ 4,019 per month. Receivable from 15th October i.e. 2.5 months till 31st December. So $ 4,019*2.5= $ 10,047.50. 46,523.00 Training fees earned at $ 2,800 per month from November to December i.e. $ 2,800*2= $ 5,600. Depreciation on Professional Library is $6,936. Depreciation on equipment $ 13,781. $ 100 payable each day for 2 employee i.e. $ 100*2days*2 employees= $ 400. $ 3,468 prepaid insurance is expired. Whole Prepaid Rent is for December. Supplies on hand at year-end, $3,006. So $ 10,768- $ 3,006= $ 7.7762 consumed. 296,800.00 50,149.50 50,149.50 327,964.50 Please give positive ratings so I can keep answering. It would help me a lot. Please comment if you have any query. Thanks!

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Wells Technical Institute
Adjusting Entries
Account	Debit $	Credit $
Insurance Expense	3,468.00
Prepaid Insurance		3,468.00
Supplies Expense	7,762.00
Teaching Supplies		7,762.00
Depreciation- Professional Library	6,936.00
Accumulated Depreciation- Professional Library		6,936.00
Depreciation- Equipment	13,871.00
Accumulated Depreciation- Equipment		13,871.00
Unearned Training Fees	5,600.00
Training Fees earned		5,600.00
Accounts Receivable	10,047.50
Tuition Fees Earned		10,047.50
Salaries Expense	400.00
Salaries Payable		400.00
Rent Expense	2,155.00
Prepaid Rent		2,155.00

T accounts
Cash
Date	Account	Debit	Credit	Balance
31-Dec-18	Balance	28,000.00		28,000.00
Accounts Receivable
Date	Account	Debit	Credit	Balance
31-Dec-18	Balance	-		-
31-Dec-18	Tuition Fees Earned	10,047.50		10,047.50
Teaching Supplies
Date	Account	Debit	Credit	Balance
31-Dec-18	Balance	10,768.00		10,768.00
31-Dec-18	Supplies Expense		7,762.00	3,006.00
Prepaid Insurance
Date	Account	Debit	Credit	Balance
31-Dec-18	Balance	16,155.00		16,155.00
31-Dec-18	Insurance Expense		7,762.00	8,393.00
Prepaid Rent
Date	Account	Debit	Credit	Balance
31-Dec-18	Balance	2,155.00		2,155.00
31-Dec-18	Rent Expense		2,155.00	-
Professional Library
Date	Account	Debit	Credit	Balance
31-Dec-18	Balance	32,307.00		32,307.00
Accumulated Depreciation- Professional Library
Date	Account	Debit	Credit	Balance
31-Dec-18	Balance		9,693.00	9,693.00
31-Dec-18	Depreciation- Professional Library		6,936.00	16,629.00
Equipment
Date	Account	Debit	Credit	Balance
31-Dec-18	Balance	75,368.00		75,368.00
Accumulated Depreciation- Equipment
Date	Account	Debit	Credit	Balance
31-Dec-18	Balance		17,232.00	17,232.00
31-Dec-18	Depreciation- Equipment		13,781.00	31,013.00
Accounts Payable
Date	Account	Debit	Credit	Balance
31-Dec-18	Balance		36,613.00	36,613.00
Salaries Payable
Date	Account	Debit	Credit	Balance
31-Dec-18	Salaries Expense		400.00	400.00
Unearned Training Fees
Date	Account	Debit	Credit	Balance
31-Dec-18	Balance		14,000.00	14,000.00
31-Dec-18	Training Fees earned	5,600.00		8,400.00
Common Stock
Date	Account	Debit	Credit	Balance
31-Dec-18	Balance		12,000.00	12,000.00
Retained Earnings
Date	Account	Debit	Credit	Balance
31-Dec-18	Balance		56,493.00	56,493.00
Dividends
Date	Account	Debit	Credit	Balance
31-Dec-18	Balance	43,078.00		43,078.00
Tuition Fees Earned
Date	Account	Debit	Credit	Balance
31-Dec-18	Balance		109,846.00	109,846.00
31-Dec-18	Accounts Receivable		10,047.50	119,893.50