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. 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 An analysis of WTI's insurance policies shows that $4,129 of coverage has expired. An inventory count shows that teaching supplies costing $3,578 are available at year-end 2017. Annual depreciation on the equipment is $16,515. Annual depreciation on the professional library is $8,258. 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 2018. On October 15, WTI agreed to teach a four-month class (beginning immediately) for an individual for $5,320 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.) 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.

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.

WELLS TECHNICAL INSTITUTE Unadjusted Trial Balance December 31, 2017
	Debit			Credit
Cash	$	28,302
Accounts receivable		0
Teaching supplies		10,884
Prepaid insurance		16,329
Prepaid rent		2,178
Professional library		32,655
Accumulated depreciation—Professional library				$	9,798
Equipment		76,185
Accumulated depreciation—Equipment					17,418
Accounts payable					37,159
Salaries payable					0
Unearned training fees					14,000
Common stock					12,000
Retained earnings					57,231
Dividends		43,542
Tuition fees earned					111,030
Training fees earned					41,364
Depreciation expense—Professional library		0
Depreciation expense—Equipment		0
Salaries expense		52,251
Insurance expense		0
Rent expense		23,958
Teaching supplies expense		0
Advertising expense		7,620
Utilities expense		6,096
Totals	$	300,000		$	300,000

Answer 1

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