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. WTl 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 WT's insurance policies shows that $2,939 of coverage has expired. b. An inventory count shows that teaching supplies costing $2,547 are available at year-end. c. Annual depreciation on the equipment is $11,756. d. Annual depreciation on the professional library is $5,878. e. On September 1, WTI agreed to do five courses for a client for $2,800 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 $14,000 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, $7,450 of the tuition has been earned by WTI. 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 Credit S Debit 26.038 0 10,013 15,023 2,004 30,043 $ 9,014 70,087 16,025 33,065 0 14,000 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 T. Wells, Capital T. Wells, Withdrawals 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 63,693 40,059 102,148 38,055 0 0 48,071 0 22.044 0 7,010 5,608 $ 276.000 $276.000

Answer 1

WTI Wells Technical Institute Journal entries No. Account Insurance expense Prepaid Insurance Credit Calculation Debit $ 2,939 a $ 2,939 b $ 7,466 10013-2547 Teaching Supplies expense Teaching Supplies $ 7,466 с $ 11,756 Depreciation expense- Equipment Accumulated Depreciation-Equipment $ 11,756 d $ 5,878 Depreciation expense- Prof Library Accumulated Depreciation Professional Library $ 5,878 e $ 5,600 2800*2 Unearned Training Fees Training fees eanred $ 5,600 f $ 7,450 Accounts Receivable Tuition fees eanred $ 7,450 g $ 400 =100*2*2 Salaries expense Salaries Payable $ 400 h $ 2,004 Rent expense Prepaid Rent $ 2,004

Wells Technical Institute T Accounts Date Debit Date Cash Unadj Bal $ 26,038 Credit Credit Date Debit Date Equipment Unadj Bal $ 70,087 Adj Bal $ 26,038 Accounts Receivable Unadj Bal $ 31-Dec $ 7,450 Adj Bal $ 70,087 Accum. Depr. - Equipment Unadj Bal $ 16,025 31-Dec $ 11,756 Adj Bal $ 7,450 Teaching Supplies $ 10,013 31-Dec $ Adj Bal $ 27,781 Accounts Payable Unadj Bal $ 33,065 Unadj Bal 7,466 Adj Bal Adj Bal $ 2,547 Prepaid Insurance $ 15,023 31-Dec $ $ 33,065 Salaries Payable Unadj Bal $ 31-Dec $ 400 Unadj Bal 2,939 Adj Bal $ 12,084 Prepaid Rent $ 2,004 31-Dec $ Adj Bal $ 400 Unearned Training Fees Unadj Bal $ 14,000 31-Dec $ 5,600 Unadj Bal 2,004 Adj Bal $ Professional Library $ 30,043 Adj Bal $ 8,400 1. Wells, Capital Unadj Bal $ 63,693 Unadj Bal Adj Bal $ 30,043 Adj Bal $ 63,693 Accum. Depr. - Professional Library 1. Wells, Withdrawals Unadj Bal $ 9,014 Unadj Bal $ 40,059 31-Dec $ 5,878 Adj Bal $ 14,892 Adj Bal $ 40,059 Tuition fees earned Rent expense Unadj Bal $ 102,148 Unadj Bal $ 22,044 31-Dec $ 7,450 31-Dec $ 2,004 Adj Bal $ 109,598 Adj Bal $ 24,048 Training fees earned Teaching Supplies expense Unadj Bal $ 38,055 Unadj Bal $ - 31-Dec $ 5,600 31-Dec $ 7,466 Adj Bal $ 43,655 Adj Bal $ 7,466 Depreciation expense-Professional Library Advertising expense Unadj Bal $ Unadj Bal $ 7,010 31-Dec $ 5,878 Adj Bal $ 7,010 Utilities expense Adj Bal $ 5,878 Depreciation expense-Equipment Unadj Bal $ 31-Dec $ 11,756 Unadj Bal $ 5,608 Adj Bal $ 11,756 Salaries expense Unadj Bal $ 48,071 31-Dec $ 400 Adj Bal $ 5,608 Insurance expense Unadj Bal $ 31-Dec $ 2,939 Adj Bal $ 48,471 Adj Bal $ 2,939

Adjusted TB Debit Credit 26,038 7,450 2,547 12,084 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 T. Wells, Capital T. Wells, Withdrawals 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 30,043 14,892 70,087 27,781 33,065 400 8,400 63,693 40,059 109,598 43,655 5,878 11,756 48,471 2,939 24,048 7,466 7,010 5,608 301,484 301,484

109,598 43,655 153,253 Wells Technical Institute Income Statement For Year Ended December 31 Revenues Tuition fees eanred Training fees eanred Total Revenues Expenses Depreciation expense- Prof Library Depreciation expense-Equipment Salaries expense Insurance expense Rent expense Teaching Supplies expense Advertising expense Utilities expense Total Expenses Net Income 5,878 11,756 48,471 2,939 24,048 7,466 7,010 5,608 113,176 40,077 Statement of Owners Equity For Year Ended December 31 T. Wells, Capital, Dec 31, prior year end Add: Net Income 63,693 40,077 103,770 (40,059) 63,711 Less: Withdrawals T. Wells, Capital, Dec 31, current year end

Wells Technical Institute Balance Sheet As of December 31, 2017 Assets Current Assets Cash Accounts Receivable Teaching Supplies Prepaid Insurance Prepaid Rent Total Current Assets 26,038 7,450 2,547 12,084 48,119 30,043 (14,892) 15,151 Fixed Assets Professional Library Accumulated Depreciation-Professional Library Professional Library, Net Equipment Accumulated Depreciation Equipment Equipment, Net Net Fixed Assets Total Assets 70,087 (27,781) 42,306 57,457 105,576 Liabilities & Equity Current Liabilities Accounts Payable Salaries Payable Unearned Training Fees Total Current Liabilities 33,065 400 8,400 41,865 Equity Capital Total Liabilities & Equity 63,711 105,576