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 a through h that require adjusting entries on December 31, 2018, follow. Additional Information Items a. An analysis of WTI's insurance policies shows that $4,129 of coverage has expired. b. An inventory count shows that teaching supplies costing $3,578 are available at year-end 2018. c. Annual depreciation on the equipment is $16,515. d. Annual depreciation on the professional library is $8,258. 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 $3,000, 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 f. On October 15, WTI agreed to teach a four-month class (beginning immediately) for an individual for $5,120 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.) 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

Answer 1

Part 1: Transaction a. General Joumal Insurance expense Prepaid insurance Debit Credit 4,129 4,129 b. 7,374 7,374 Teaching supplies expense Teaching supplies (10652-3278) Depreciation expense-Equipment Accumulated depreciation-Equipment c. 16,515 16,515 d. 8,258 Depreciation expense-Professional library Accumulated depreciation-Professional library 8,258 e. 6,000 Unearned training fees Training fees earned 6,000 (3000*2) f. 12,800 Accounts receivable Tuition fees earned 12,800 (5120*2.5) g. 400 Salaries expense Salaries payable 400 (100*2*2) h. 2,132 Rent expense Prepaid rent 2,132

Part 2 Cash 27,698 Equipment 74,555 Unadj. Bal. Unadj. Bal. Adj. Bal. 27,6981 Adj. Bal. 74,555 Accounts Receivable Unadj. Bal. 0 Accumulated Depreciation Equipment Unadj. Bal. 17,046 16,515 f 12,800 с Adj. Bal. 12,800 Adj. Bal. 33,561 Accounts Payable Unadj. Bal. Teaching Supplies 10,652 b 0 Unadj. Bal. 35,068 7,374 0 Adj. Bal. 3,2781 Adj. Bal. 35,068 Salaries Payable Prepaid Insurance 15,981 Unadj. Bal. Unadj. Bal. a 4,129 8 400 Adj. Bal. 11,852 Adj. Bal. 400 Unearned Training Fees Prepaid Rent 2,132 Unadj. Bal. Unadj. Bal. 15,000 h 2,132) e 6,000 Adj. Bal. 0 Adj. Bal. 9,000 common stock Professional Library 31,958 Unadj. Bal. Unadj. Bal. 13,000 Adj. Bal. 31,958 Adj. Bal. 13,000 Accumulated Depreciation-Professional Library Unadj. Bal. 9,589 d 8,258 Dividends 42,613 Unadj. Bal. Adj. Bal. 17,847 Adj. Bal. 42,613

Tuition Fees Earned Unadj. Bal. Unadj. Bal. 108,661 12,800 Insurance Expense 0 4,129 a Adj. Bal. 121,461 Adj. Bal. 4,129 Training Fees Earned Unadj. Bal. 40,482 6,000 Unadj. Bal. h Rent Expense 23,452 2,132 e Adj. Bal. 46,482 Adj. Bal. 25,584 Depreciation Expense-Professional Library Unadj. Bal. 0 8,258 Unadj. Bal. b Teaching Supplies Expense 0 7,374 d Adj. Bal. 8,258 Adj. Bal. 7,374 Depreciation Expense-Equipment Unadj. Bal. C 16,515 Advertising Expense 7,457) 0 Unadj. Bal. Adj. Bal. 16,515 Adj. Bal. 7,457 Salaries Expense 51,136 400 Utilities Expense 5,966 Unadj. Bal. g Unadj. Bal. Adj. Bal. 51,536 Adj. Bal. 5,966 Retained earning Unadj. Bal. 54,754 Adj. Bal. 54,754

Part 3 WELLS TECHNICAL INSTITUTE Adjusted Trial Balance December 31, 2018 Debit Credit 27698 12,800 3,2781 11,852 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 31,958 17,847 74,555 33,561 35,068 400 9,000 13,000 54,754 42,613 121,461| 46,482 8,258 16,515 51,536 4,129 25,584 7,374 7,457 5,966 331573 331573

4a) WELLS TECHNICAL INSTITUTE Income Statement For Year Ended December 31. Revenues Training fees earned 46,482 Tuition fees earned 121,461 4b) WELLS TECHNICAL INSTITUTE Statement of retained earning For Year Ended December 31. Retained earning, at beg. Add: Net income 54,754 41,124 95878 42,613 53,265 Less: Dividends Retained earning, December 31. 167,943 Total revenues Expenses Depreciation expense-Equipment Salaries expense Insurance expense Rent expense Teaching supplies expense Utilities expense Advertising expense Depreciation expense- Professional library 16,515 51,536 4,129 25,584 7,374 5,966 7,457 8,258 126,819 Total expenses Net income 41,124

4c) WELLS TECHNICAL INSTITUTE Balance Sheet December 31, 2018 Assets Cash Accounts receivable Teaching supplies Prepaid insurance 27698 12,800 3,278 11,852 14111 Professional library 31,958 Accumulated depreciation-Professional library -17,847 Equipment 74,555 Accumulated depreciation-Equipment -33,561 Total assets Liabilities Accounts payable Salaries payable Unearned training fees 40994 110733 35,068 400 9,000 Total liabilities 44468 Equity common stock Retained earning 13,000 53,265 Total equity Total liabilities and equity 66,265 110,733