Question

Skip to main content

Problems - Chapter 3

AnswerSaved

Help opens in a new windowSave & ExitSubmit

Item3

Part 2 of 3

6.25points

Time Remaining 1 hour 14 minutes 33 seconds

01:14:33

eBookReferences

Item3

Item 3 Part 2 of 3 6.25 points

Time Remaining 1 hour 14 minutes 33 seconds

01:14:33

Required information

Required information

[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, 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 $3,600 of coverage has expired.
2. An inventory count shows that teaching supplies costing $3,120 are available at year-end 2017.
3. Annual depreciation on the equipment is $14,400.
4. Annual depreciation on the professional library is $7,200.
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 $2,700, 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 $4,380 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					35,749
Salaries payable					0
Unearned training fees					13,500
Common stock					14,000
Retained earnings					52,646
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

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.
  

Cash 27,845 Equipment 73,338 Unadj. Bal. Unadj. Bal. Adj. Bal. 27,845 Adj. Bal. 73.338 Accounts Receivable Accumulated Depreciation Equipment Unadj. Bal. Unadj. Bal. Adj. Bal. Adj. Bal. Teaching Supplies Accounts Payable Unadj. Bal. Unadj. Bal. Adj. Bal. Adj. Bal. Prepaid Insurance Salaries Payable Unadj. Bal. Unadj. Bal. Adj. Bal. Adj. Bal.

Answer 1

Cash					Equipment
Unadj. Bal.	$27245				Unadj. Bal.	$73338
Adj. Bal.	$27245				Adj. Bal.	$73338
Account Receivable					Accumulated Depreciation- Equipment
Unadj. Bal.	$0				Unadj. Bal.			$16768
6	10950						3	14400
Adj. Bal.	$10950				Adj. Bal.			$31168
Teaching Supplies					Account Payable
Unadj. Bal.	$10478				Unadj. Bal.			$35749
		2	7358
Adj. Bal.	$3120				Adj. Bal.			$35749
Prepaid Insurance					Salaries Payable
Unadj. Bal.	$15719				Unadj. Bal.			$0
		1	3600				7	400
Adj. Bal.	$12119				Adj Bal.			$400
Prepaid Rent					Unearned Training Fees
Unadj. Bal.	$2097				Unadj. Bal.			$13500
		8	2097		5	5400
Adj Bal.	$0				Adj. Bal.			$8100
Professional Library					Common Stock
Unadj. Bal.	$31436				Unadj. Bal.			$14000
Adj. Bal.	$31436				Adj. Bal.			$14000
Accumulated Depreciation- Professional Library					Retained Earnings
Unadj. Bal.			$9432		Unadj. Bal.			$52646
		4	7200
Adj. Bal.			$16632		Adj. Bal.			$52646
Tuition Fees Earned					Dividends
Unadj. Bal.			$106885		Unadj. Bal.	$41916
		6	10950
Adj. Bal.			$117835		Adj. Bal.	$41916
Training Fees Earned					Rent Expense
Unadj. Bal.			$39820		Unadj. Bal.	$23067
		5	5400		8	2097
Adj. Bal.			$45220		Adj. Bal.	$25164
Depreciation Expense- Professional Library					Teaching Supplies Expense
Unadj. Bal.	$0				Unadj. Bal.	$0
4	7200				2	7358
Adj. Bal.	7200				Adj. Bal.	$7358
Depreciation Expense- Equipment					Advertising Expense
Unadj. Bal.	$0				Unadj. Bal.	$7336
3	14400
Adj. Bal.	14400				Adj. Bal.	$7336
Salaries Expense					Utilities Expense
Unadj. Bal.	$50300				Unadj. Bal.	$5868
7	400
Adj. Bal.	$50700				Adj. Bal.	$5868
Insurance Expense
Unadj. Bal.	$0
1	3600
Adj. Bal.	$3600

Tuition Fees Earned= $4380*2.5= $10950

Teaching supplies= $10478-3120= $7358

Salaries Payable= $100*2*2= 400

Unearned Training Fees= $2700*2= $5400

WELLS TECHNICAL INSTITUTE
Adjusted Trial Balance
December 31,2017
	Debit	Credit
Cash	$27245
Account receivable	10950
Teaching supplies	3120
Prepaid Insurance	12119
Prepaid Rent	0
Professional Library	31436
Accumulated depreciation- Professional Library		16632
Equipment	73338
Accumulated depreciation- Equipment		31168
Account payable		35749
Salaries payable		400
Unearned training fees		8100
Common stock		14000
Retained Earnings		52646
Dividends	41916
Tuition fees earned		117835
Training fees earned		45220
Depreciation expense- Professional Library	7200
Depreciation expense- Equipment	14400
Salaries expense	50700
Insurance expense	3600
Rent expense	25164
Teaching supplies expense	7358
Advertising expense	7336
Utilities Expense	5868
Total	$321750	$321750