1. Prepare the necessary adjusting journal entries for items a through h . Assum
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Question
1. Prepare the necessary adjusting journal entries for items a through h. Assume that adjusting entries are made only at year-end.
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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 athrough h that require adjusting entries on December 31, 2017, follow.
Additional Information Items
An analysis of WTI's insurance policies shows that $2,674 of coverage has expired.
An inventory count shows that teaching supplies costing $2,318 are available at year-end 2017.
Annual depreciation on the equipment is $10,698.
Annual depreciation on the professional library is $5,349.
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 $2,800, 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.
On October 15, WTI agreed to teach a four-month class (beginning immediately) for an individual for $2,461 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.)
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.
The balance in the Prepaid Rent account represents rent for December.
Required:
WELLS TECHNICAL INSTITUTEUnadjusted Trial Balance
December 31, 2017 Debit Credit Cash $ 27,094 Accounts receivable 0 Teaching supplies 10,420 Prepaid insurance 15,632 Prepaid rent 2,085 Professional library 31,262 Accumulated depreciation—Professional library $ 9,380 Equipment 72,935 Accumulated depreciation—Equipment 16,675 Accounts payable 34,976 Salaries payable 0 Unearned training fees 14,000 Common stock 14,000 Retained earnings 52,277 Dividends 41,684 Tuition fees earned 106,293 Training fees earned 39,599 Depreciation expense—Professional library 0 Depreciation expense—Equipment 0 Salaries expense 50,022 Insurance expense 0 Rent expense 22,935 Teaching supplies expense 0 Advertising expense 7,295 Utilities expense 5,836 Totals $ 287,200 $ 287,200
Explanation / Answer
Wells Technical Institute Journal Entries for the period ended 31 Dec 2017 Adjusting Entries Date Account Title Dr Amount Cr Amount 31-Dec Inurance Exp $2,674 To Prepaid Exp $2,674 being the prepaid exp recorded 31-Dec Teaching Supplies Exp-$10420-$2318 $8,102 To Teaching Supplies $8,102 to record the supplies 31-Dec Depreciation Exp-Equipment $10,698 To Accumuated Depreciation Exp-Equipment $10,698 to record the deprecaition exp on equipment 31-Dec Depreciation Exp-Professional Library $5,349 To Accumulated Depreciation Exp-Professional Library $5,349 to record the depreciation for professional library 31-Dec Unearned Training Fess-$2800*3 $8,400 To Training Fees Earned $8,400 To record the unearned training fees 31-Dec Accounts Receivable -2.5 months*$2461 $6,152.50 To Tution Fees Earned $6,152.50 to record the WTI accurals 31-Dec Salaries-$100*2 days*2 Employees $400 To Salary Payable $400 to record the salaries accrued 31-Dec Rent $2,085 To Prepaid Rent $2,085 To record the prepaid rent
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