An analysis of WTI\'s insurance policies shows that $2,400 of coverage has expir
ID: 2336414 • Letter: A
Question
An analysis of WTI's insurance policies shows that $2,400 of coverage has expired.
An inventory count shows that teaching supplies costing $2,800 are available at year-end 2017.
Annual depreciation on the equipment is $13,200.
Annual depreciation on the professional library is $7,200.
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 2018.
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.)
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:
1. Prepare the necessary adjusting journal entries for items a through h. Assume that adjusting entries are made only at year-end.
Unadjusted Trial Balance
December 31, 2017 Debit Credit Cash $ 34,000 Accounts receivable 0 Teaching supplies 8,000 Prepaid insurance 12,000 Prepaid rent 3,000 Professional library 35,000 Accumulated depreciation—Professional library $ 10,000 Equipment 80,000 Accumulated depreciation—Equipment 15,000 Accounts payable 26,000 Salaries payable 0 Unearned training fees 12,500 Common stock 10,000 Retained earnings 80,000 Dividends 50,000 Tuition fees earned 123,900 Training fees earned 40,000 Depreciation expense—Professional library 0 Depreciation expense—Equipment 0 Salaries expense 50,000 Insurance expense 0 Rent expense 33,000 Teaching supplies expense 0 Advertising expense 6,000 Utilities expense 6,400 Totals $ 317,400 $ 317,400
Explanation / Answer
Solution:
Journal Entries
Dec 31, 2017
Date Accounts Explanation Debit Credit Dec 31,2007 Insurance expense Dr. $2,400 To Prepaid insurance $2,400 Dec 31 2017 Teaching supplies expense Dr. $5,200 To teaching supplies $5,200 Dec 31, 2017 Depreciation Dr $13,200 To Accumulated Depreciation- Equipment $13,200 Dec 31, 2017 Depreciation Dr. $7,200 To Accumulated depreciation - prof.library $7,200 Dec 31, 2017 Unearned training fees Dr. $5,000 To Training fees Earned 5,000 Dec 31, 2017 Accounts receivables Dr. $1,500 To turion fees earned $1,500Dec 31, 2017
Salaries expense Dr. $400 To salaries payable $400 Dec 31, 2017 Rent expense Dr $3,000 To Prepaid rent $3,000Related Questions
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