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, 2018, follows. WTI initially records prepaid expenses and unearned revenues in balance sheet accounts. Descriptions of items athrough h that require adjusting entries on December 31, 2018, follow.
  
Additional Information Items

1. An analysis of WTI's insurance policies shows that $2,400 of coverage has expired.
2. An inventory count shows that teaching supplies costing $2,800 are available at year-end 2018.
3. Annual depreciation on the equipment is $13,200.
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 $2,500, 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 2019.
6. On October 15, WTI agreed to teach a four-month class (beginning immediately) for an individual for $3,000 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, 2018 Credit Debit $ 34,000 0 8,000 12,000 3,000 35,000 $ 10,000 80,000 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, December 31, 2017 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 15,000 26,000 0 12,500 10,000 80,000 50,000 123,900 40,000 0 0 50,000 0 33,000 0 6,000 6,400 $ 317,400 $317,400
   

1 & 3-a. Post the balance from the unadjusted trial balance and the adjusting entries into the T-accounts.
1 & 3-b. Prepare an adjusted trial balance.
  

Answer 1

2) Adjusting Entries: DATE CREDIT EVENT a) DEBIT $2,400 Dec. 31 $2,400 b) Dec. 31 $5,200 [$8000 - $2800] $5,200 Dec. 31 $13,200 $13,200 d) Dec. 31 $7,200 ACCOUNT TITLES Insurance Expense Prepaid Insurance Teaching Supplies Expense Teaching Supplies Depreciation Expense - Equipment Accumulative Depreciation - Equipment Depreciation Expense - Prof. Library Accumulative Depreciation - Prof. Library Unearned Revenue Training Revenue Accounts Receivable Tuition Revenue Salaries Expense Salaries Payable Rent Expense Prepaid Rent $7,200 e) Dec. 31 $5,000 [$2500 x 2 courses] $5,000 a) Dec. 31 $7,500 $7,500 [Given] (For Oct 15 thru Dec. 31, it is earned --> $3,000 x 2.5 months) [2 employees x 2 days x $100] g) Dec. 31 $400 $400 h) Dec. 31 $3,000 $3,000

1&3) Unadj. bal. Cash $34,000 $34,000 Professional Library $35,000 $35,000 Salaries Payable Unadj. bal. Unadj. bal. Adj. bal. Adj. bal. $0 $400 $400 Adj. bal. Unadj. bal. a) Adj. bal. Accounts Receivable $0 $7,500 $7,500 Accumulated Depreciation - Professional Library Unadj. bal. $10,000 d) $7,200 Adj. bal. $17,200 e) Unearned Training Fees $5,000 Unadj. bal. $12,500 $7,500 Adj. bal. Teaching Supplies $8,000 b) $2,800 Unadj. bal. Adj. bal. $5,200 Unadj. bal. Adj. bal. Equipment $80,000 $80,000 Common Stock Unadj. bal. Adj. bal. $10,000 $10,000 Prepaid Insurance $12,000 a) $9,600 Retained Earnings Unadj. bal. Adj. bal. $2,400 Accumulated Depreciation - Equipment Unadj. bal. $15,000 c) $13,200 Adj. bal. $28,200 Unadj. bal. Adj. bal. $80,000 $80,000 Prepaid Rent $3,000 h) $0 Unadj. ba Adi. bal. Unadi. bal. Dividends $50,000 $50,000 Accounts Payable Unadi. bal. Adj. bal. $3,000 $26,000 $26,000 Adj. bal.

Tution Fees Earned Unadj. bal. a) Adj. bal. $123,900 $7,500 $131,400 Unadj. bal. b) Adj. bal. Teaching Supplies Expense $0 $5,200 $5,200 Training Fees Earned Unadj. bal. e) Adj. bal. $40,000 $5,000 $45,000 Unadj. bal. h) Adj. bal. Rent expense $33,000 $3,000 $36,000 Depreciation Expense - Prof. Library Unadj. bal. $0 d) $7,200 Adj. bal. $7,200 Unadj. bal. Adj. bal. Advertising Expense $6,000 $6,000 Unadj. bal. Adj. bal. Utilities Expense $6,400 $6,400 Depreciation Expense - Equipment Unadj. bal. $0 c) $13,200 Adj. bal. $13,200 Unadj. bal. a) Adj. bal. Insurance expense SO $2,400 $2,400 Unadj. bal. Salaries Expense $50,000 $400 $50,400 Adj. bal.

WELLS TECHNICAL INSTITUTE Adjusted Trial Balance December 31 ACCOUNT TITLES Cash Accounts Receivable Teaching Supplies Perpaid Insurance Professional Library Accumulated Depreciation - Professional Library Equipment Accumulated Depreciation - Equipment Accounts Payable Salaries Payable Unearned Training Fees Common Stock Retained Earnings Dividends Tution Fees Earned Training Fees Earned Depreciation Expense - Prof. Library Depreciation Expense - Equipment Salaries Expense Insurance expense Rent expense Teaching Supplies Expense Advertising Expense Utilities Expense TOTALS DEBIT CREDIT $34,000 $7,500 $2,800 $9,600 $35,000 $17,200 $80,000 $28,200 $26,000 $400 $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