Question

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 An analysis of WTI's insurance policies shows that $3,864 of coverage has expired. An inventory count shows that teaching supplies costing $3,349 are available at year-end. Annual depreciation on the equipment is $15,458. Annual depreciation on the professional library is $7,729. 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. 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, $13,500 of the tuition has been earned by WTI. 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. The balance in the Prepaid Rent account represents rent for December. WELLS TECHNICAL INSTITUTE Unadjusted Trial Balance December 31 Debit Credit Cash $ 26,793 Accounts receivable 0 Teaching supplies 10,304 Prepaid insurance 15,458 Prepaid rent 2,062 Professional library 30,913 Accumulated depreciation—Professional library $ 9,275 Equipment 72,119 Accumulated depreciation—Equipment 16,489 Accounts payable 37,431 Salaries payable 0 Unearned training fees 11,000 T. Wells, Capital 65,539 T. Wells, Withdrawals 41,220 Tuition fees earned 105,108 Training fees earned 39,158 Depreciation expense—Professional library 0 Depreciation expense—Equipment 0 Salaries expense 49,464 Insurance expense 0 Rent expense 22,682 Teaching supplies expense 0 Advertising expense 7,214 Utilities expense 5,771 Totals $ 284,000 $ 284,000 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

M Adjusting Entries Date General Journal Debit Credit $ 3,864 Dec-31 Insurance expense Prepaid Insurance $ 3,864 $ 6,955 Dec-31 Teaching Supplies Expense Teaching Supplies ($10,304-$3,349) $ 6,955 $ 15,458 Dec-31 Depriciation Expnese-Equipment | Accumulated depriciation-Equipment $ 15,458 d $ 7,729 Dec-31 Depriciation Expnese-Professional Liabrary | Accumulated depriciaition-Professional Liabrary $ 7,729 e $ 4,400 Dec-31 Unearned Training fees Training Fees earned ($2,200 * 2 months) $ 4,400 1 $ 13,500 Dec-31 Accounts Receivable Tution fees earned $ 13,500 $ 400 Dec-31 Salaries expense Salaries Payable (2 employees* 2 days *$100) $ 400 $ 2,062 Dec-31 Rent expense Prepaid rent $ 2,062

Unadj Bal $ Cash 26,793 Unadj Bal $ Equipment 72,119 Adj bal. $ 26,793 Adj bal. $ 72,119 Acconts Receivable Unadi Bal Accumulated deprication-equipment Unadj. Bal. $ $ $ $ 13,500 13,500 16,489 15,458 31,947 Adj bal. $ Unadj Bal $ Teaching Supplies 10,304 Accounts Payable Unadj. Bal. $ 37,431 $ 6,955 Adj bal. $ 3,349 $ 37,431 Unadj Bal $ Prepaid Insurance 15,458 a 11,594 Salaries Payable Unadj. Bal. $ $ 3,864 Adj bal. $ $ 400 $ Prepaid Rent 2,062 Unadj Bal Adj bal. 11,000 $ Unearned Training Fees Unadj. Bal. $ 4,400 $ 2,062 6,600 Unadj Bal $ Professional Liabrary 30,913 TWells Capital Unadj. Bal. $ 65,539 Adj bal. $ 30,913 $ 65,539 Accumulated deprication-Professional Liabrary Unadj. Bal. $ Unadi Bal $ T Wells Withdrawals 41,220 9,275 7,729 17,004 $ Adj bal. $ 41,220 Insurance Expense Tution Fees Earned Unadj. Bal. Unadj Bal $ $ $ $ 105,108 13,500 118,608 S 3,864 3,864 Adj bal. $ Training Fees Eamed Unadj. Bal. $ Unadj Bal $ 39,158 4,400 43,558 Rent Expense 23,188 2,062 25,250 $ Adj bal. $ Unadj Bal Deprication Expense- equipment S $ 15,458 $ 15,458 Deprication Expense- Professional Liabrary Unadj Bal 5 $ 7,729 Adj bal. $ 7,729 Adj bal. Teaching Supplies Expense $ $ 6,955 $ 6,955 Unadj Bal $ Advertising Expense 7,214 Unadj Bal b. Adj bal. Adj bal. $ 7,214 Unadj Bal $ Salaries Expense 49,464 Unadi Bal $ Utilities Expense 5,771 400 Adj bal. $ 49,864 Adj bal. $ 5,771

Unadjusted Trial Balance Debit Credit $ 26,793 Adjustments Credit Debit Debit Cash Adjusted Trial Balance Credit 26,793 13,500 3,349 11,594 $ 13,500 $ 10,304 15,458 2,062 30,913 $ $ 6,955 $ 3,864 $ 2,062$ 1$ 7,729 $ 15,458 $ 30.913 S 9,275 $ Accounts Receivable Teaching Supplies Prepaid Insurance Prepaid rent Professional Liabrary Accumulated depriciation-Professional Library Equipment Accumulated depriciation-Equipment Accounts Payable Salaries Payable Unearned Training Fees T Wells Capital T Wells Withdrawals 17,004 72,119 72,119 16,489 37,431 31,947 37,431 400 IS 400 $ 4,400 $ $ 6,600 $ $ $ 11,000 65,539 65,539 $ 41,220 41,220 $ $ $ 105,108 39,158 5001 4,400 118,608 43,558 $ - $ $ S $ 49,464 $ Tution fees earned Training fees earned Depriciation Expense-Professional Library Depriciation Expense-Equipment Salaries Expense Insurance Expense Rent expense Teaching Supplies Expense Advertising Expense Utilities Expense 7,729 15,458 400 3,864 2,062 6,955 $ S IS 7,729 15,458 49,864 3,864 24,744 6,955 7,214 5,771 321,087 $ 22,682 $ $ $ $ 7,214 5,771 284,000 $ 284,000 $ 54,368 $ 54,368 $ 321,087 Income statement atement Tution fees earned Training fees earned total revenues $ $ 118,608 43,558 $ 162,166 Expenses Depriciation Expense-Professional Library Depriciation Expense-Equipment Salaries Expense Insurance Expense Rent expense Teaching Supplies Expense Advertising Expense Utilities Expense total expenses $ $ $ $ $ $ 7,729 15,458 49,864 3,864 24,744 6,955 7,214 5,771 $ 121,599 net income $ 40,567 St. of Owners Equity Opening Balance Add :Net income $ $ 65,539 40,567 106,106 41,220 64,886 Withdrawals Closing Balance IS S

$ $ 26,793 13,500 3,349 11,594 Balance sheet Cash Accounts Receivable Teaching Supplies Prepaid Insurance Prepaid rent Professional Liabrary Accumulated depriciation Professional Library Equipment Accumulated depriciation-Equipment total assets 13,909 $ $ $ 30,913 17,004 $ 72,119 31,947 $ $ 40,172 109,317 $ Liabilties Accounts Payable Salaries Payable Unearned Training Fees 37,431 400 6,600 $ total liabilties $ 44,431 Equity T.Wells Capital total equity $ 64,886 64,886 total liabilties & equity $ 109,317