Question

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 a. An analysis of WTI's insurance policies shows that $3,600 of coverage has expired. b. An inventory count shows that teaching supplies costing $3,120 are available at year-end 2017 C. Annual depreciation on the equipment is $14.400. d. Annual depreciation on the professional library is $7.200. 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 $2,600, 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 f. On October 15, WTI agreed to teach a four-month class (beginning immediately) for an individual for $4,480 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 accruall) 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. WELLS TECHNICAL INSTITUTE Unadjusted Trial Balance December 31, 2017 Credit Debit 27,094 $ Accounts receivable Teaching supplies Prepaid insurance 10.42e 15,632 2,885 31.262 $ 9,380 72,935 16,675 35,976 Professional library Accumulated depreciation Professional library Equipment Accumulated depreciation Equipment Accounts payable Salarios payable Unearned training fees Cormon stock Retained earnings Dividends Tuition fees carned Training fees carned Depreciation expense-Professional library Depreciation expense Equipment Salaries expense 13, eee 11.ee 55,277 41,684 186,293 39,599 52,822 22,935 Rent expense Teaching supplies expense Advertising expense Utilities expense Totals 7,295 5.836 287,zee $287,200

Answer 1

Part a: Transaction General Journal a. Insurance expense Prepaid insurance Debit Credit 3,600 3,600 7,300 Teaching supplies expense Teaching supplies 7,300 10420-3120 c. 14,400 Depreciation expense-Equipment Accumulated depreciation Equipment 14.400 7,200 Depreciation expense-Professional library Accumulated depreciation Professional library 7,200 5,200 Unearned training fees Training fees earned 5,200 (2600*2) f. 11,200 Accounts receivable Tuition fees earned 11, 200 4480*2.5 400 Salaries expense Salaries payable 400 (100*2*2) 2,085 Rent expense Prepaid rent 2,085

Part 2a Cash 27,094 Equipment 72,935 Unadj. Bal. Un adj. Bal. Adj. Bal. 27,094 Adj. Bal. 72,935 Accounts Receivable Unadj. Bal. Accumulated Depreciation Equipment Un adj. Bal. 16,675 14,400 11,200 Adj. Bal. 11,200 Adj. Bal. L 31,075 Accounts Payable Teaching Supplies 10,420 Unadj. Bal. Un adj. Bal. 35,976 7,300 Adj. Bal. 3,120 Adj. Bal. 35,976 Salaries Payable Prepaid Insurance 15,632 Unadj. Bal. Un adj. Bal. 3,600 Adj. Bal. 12,032 Adj. Bal. Unearned Training Fees Prepaid Rent 2,085 Unadj. Bal. Un adj. Bal. 13,000 2,085 5,200 Adj. Bal. Adj. Bal. 7.800 common stock Unadj. Bal. Professional Library 31,262 Un adj. Bal. 11,000 Adj. Bal. 31,262 Adi. Bal. 11,000 Accumulated Depreciation-Professional Library Unadj. Bal. 9,380 7,200 Dividends 41,684 Un adj. Bal. Adj. Bal. 16,580 Adj. Bal. 41,684

Tuition Fees Earned Insurance Expense Unadj. Bal. Un adj. Bal. 106,293 11,200 3,600 Adj. Bal. 117,493 Adj. Bal. 3,600 Training Fees Earned Unadj. Bal. Un adj. Bal. 39,599 5,200 Rent Expense 22,935 2,085 Adj. Bal. 44,7991 Adj. Bal. 25,020 Depreciation Expense-Professional Library Unadj. Bal. 7,200 Un adj. Bal. Teaching Supplies Expense 0 7,300 Adj. Bal. 7,200 Adj. Bal. 7,300 Depreciation Expense - Equipment Unadj. Bal. 14,400 Advertising Expense 7,295 Un adj. Bal. Adj. Bal. 14,400 Adj. Bal. 7,295 Salaries Expense 50,022 4001 Utilities Expense 5,836 Unadj. Bal. Un adj. Bal. Adj. Bal. 50,422 Adj. Bal. 5,836 Retained earning Un adj. Bal. 55,277 Adj. Bal. 55,277

Part 2b WELLS TECHNICAL INSTITUTE Adjusted Trial Balance December 31,2017 Credit Debit 27094 11,200 3,120 12,032 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 earning Dividends Tuition fees earned Training fees earned Depreciation expense - Professional library Depreciation expense-Equipment Salaries expense Insurance expense Rent expense Teaching supplies expense Advertising expense Utilities expense Totals 31,262 16,580 72,9351 31,075 35,976 400 7,800 11,000 55, 277 41,684 117,493 44,799 7,200 14,400 50,422 3,6001 25,020 7,3001 7,2951 5,836 320400 320400

WELLS TECHNICAL INSTITUTE Income Statement For Year Ended December 31, 2017 Revenues Training fees earned 44,799 Tuition fees earned 117,493 WELLS TECHNICALINSTITUTE Statement of retained earning For Year Ended December 31, 2017 Retained earning, at beg. 55,277 Add: Net income 41,219 96496 Less: Dividends 41,684 Retained earning, December 31,2017 54,812 162,292 Total revenues Expenses Depreciation expense-Equipment Salaries expense Insurance expense Rent expense Teaching supplies expense Utilities expense Advertising expense Depreciation expense-Professional library 14,400 50,422 3,600 25,020 7,300 5,836 7,295 7,200 Total expenses 121,073 Net income 41,219

WELLS TECHNICAL INSTITUTE Balance Sheet December 31, 2017 Assets Cash Accounts receivable Teaching supplies Prepaid insurance 27094 11,200 3,120 12,032 14682 31,262 - 16,580 72,935 - 31,075 Professional library Accumulated depreciation-Professional library Equipment Accumulated depreciation Equipment Total assets Liabilities Accounts payable Salaries payable Unearned training fees 41860 109988 35,976 400 7,800 Total liabilities 44176 Equity common stock Retained earning 11,000 54,812 Total equity Total liabilities and equity 65,812 109,988