Question

Required information Problem 3-3A Preparing adjusting entries, adjusted trial balance, and financial statements LO P1, P2, P3, P4, P5, P6 [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. 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 a. An analysis of WTI's insurance policies shows that $2,400 of coverage has expired. b. An inventory count shows that teaching supplies costing $2,800 are available at year-end. c. Annual depreciation on the equipment is $13,200. d. Annual depreciation on the professional library is $7,200. e. On September 1, WTI agreed to do five courses for a client for $2.500 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 $12.500 cash in advance for all five courses on September 1, and WTI credited Unearned Training Fees. f. 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. $7.500 of the tuition has been earned by WTI. a. WTI's two employees are paid weekly. As of the end of the year, two days' salaries have accried at the rate of $100 per day for each employee. h. The balance in the Prepaid Rent account represents rent for December

Answer 1

WTI Wells Technical Institute Journal entries No. Account a Insurance expense Prepaid Insurance Credit Calculation Debit $ 2,400 $ 2,400 b $ 5,200 =8,000-2,800 Teaching Supplies expense Teaching Supplies $ 5,200 с $ 13,200 Depreciation expense-Equipment Accumulated Depreciation Equipment $ 13,200 d $ 7,200 Depreciation expense- Prof Library Accumulated Depreciation-Professional Library $ 7,200 $ 5,000 =2,500*2 Unearned Training Fees Training fees eanred $ 5,000 $ 7,500 Accounts Receivable Tuition fees eanred $ 7,500 g $ 400 =100*2*2 Salaries expense Salaries Payable $ 400 h $ 3,000 Rent expense Prepaid Rent $ 3,000

Wells Technical Institute T Accounts Date Debit Date Cash Unadj Bal $ 34,000 Credit Credit Date Debit Date Equipment Unadj Bal $ 80,000 Adj Bal $ 34,000 Accounts Receivable Unadj Bal $ . 31-Dec $ 7,500 Adj Bal $ 80,000 Accum. Depr. - Equipment Unadj Bal $15,000 31-Dec $ 13,200 Adj Bal $ 7,500 Teaching Supplies $ 8,000 31-Dec $ Adj Bal $ 28,200 Accounts Payable Unadj Bal $ 26,000 Unadj Bal 5,200 Adj Bal $ 2,800 Prepaid Insurance $ 12,000 31-Dec $ Adj Bal $ 26,000 Salaries Payable Unadj Bal $ 31-Dec $ 400 Unadj Bal 2,400 Adj Bal $ 9,600 Prepaid Rent 3,000 31-Dec $ Adj Bal $ 400 Unearned Training Fees Unadj Bal $ 12,500 31-Dec $ 5,000 Unadj Bal $ 3,000 Adj Bal $ Professional Library $ 35,000 Adj Bal $ 7,500 Common Stock Unadj Bal $10,000 Unadj Bal $10,000 Adj Bal $ 35,000 Accum. Depr. - Professional Library Unadj Bal $ 10,000 31-Dec $ 7,200 Adj Bal Dividends Unadj Bal $ 50,000 Adj Bal $ 17,200 Adj Bal Tuition fees earned Unadj Bal $ 123,900 31-Dec $ 7,500 $ 50,000 Retained Earnings Unadj Bal $ 80,000 $ 80,000 Adj Bal $ 131,400 Training fees earned Unadj Bal $ 40,000 31-Dec $ 5,000 Adj Bal Rent expense Unadj Bal $ 33,000 31-Dec $ 3,000 Adj Bal $ 45,000 Depreciation expense-Professional Library Unadj Bal $ - 31-Dec $ 7,200 Adj Bal $ 36,000 Teaching Supplies expense Unadj Bal $ 31-Dec $ 5,200 Adj Bal $ 7,200 Depreciation expense-Equipment Unadj Bal $ 31-Dec $ 13,200 Adj Bal $ 5,200 Advertising expense Unadj Bal $ 6,000 Adj Bal $ 13,200 Salaries expense Unadj Bal $ 50,000 31-Dec $ 400 Adj Bal $ 6,000 Utilities expense Unadj Bal $ 6,400 Adj Bal $ 6,400 Adj Bal $ 50,400 Insurance expense Unadj Bal $ . 31-Dec $ 2,400 Adj Bal $ 2,400

Adjusted TB Debit Credit 34,000 7,500 2,800 9,600 35,000 17,200 80,000 28,200 26,000 400 Wells Technical Institute Account Names Cash Accounts Receivable Teaching Supplies Prepaid Insurance Prepaid Rent Professional Library Accumulated Depreciation-Professional Library Equipment Accumulated Depreciation-Equipment Accounts Payable Salaries Payable Unearned Training Fees Common Stock Retained Earnings Dividends Tuition fees eanred Training fees eanred Depreciation expense- Prof Library Depreciation expense-Equipment Salaries expense Insurance expense Rent expense Teaching Supplies expense Advertising expense Utilities expense Totals 7,500 10,000 80,000 50,000 131,400 45,000 7,200 13,200 50,400 2,400 36,000 5,200 6,000 6,400 345,700 345,700