Wells Technical Institute (WTI), a school owned by Tristana Wells, provides trai
ID: 2336592 • Letter: W
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, 2017, 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, 2017, follow.
Additional Information Items
a. An analysis of WTI's insurance policies shows that $2,400 of coverage has expired.
b. An inventory count shows that teaching supplies costing $2,800 are available at year-end 2017.
c. Annual depreciation on the equipment is $13,200.
d. Annual depreciation on the professional library is $7,200.
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 $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.
f. 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.)
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.
1. Prepare the necessary adjusting journal entries for items a through h. Assume that adjusting entries are made only at year-end.
2-a. Post the balance from the unadjusted trial balance and the adjusting entries in to the T-accounts.
2-b. Prepare an adjusted trial balance.
3-a. Prepare Wells Technical Institute's income statement for the year 2017.
3-b. Prepare Wells Technical Institute's statement of retained earnings for the year 2017.
3-c. Prepare Wells Technical Institute's balance sheet as of December 31, 2017.
Explanation / Answer
1. Prepare the necessary adjusting journal entries for items a through h. Assume that adjusting entries are made only at year-end.
Adjusting entries (Dec. 31, 2017).
Date
General Journal
Debit
Credit
Dec 31 (a)
Insurance expense
2,400
Prepaid insurance
2,400
Dec 31 (b)
Teaching supplies expense
5,200
Teaching Supplies
5,200
Dec 31 (c)
Depreciation expense-Equipment
13,200
Accumulated depreciation- Equipment
13,200
Dec 31 (d)
Depreciation expense- Professional library
7,200
Accumulated depreciation-Professional library
7,200
Dec 31 (e)
Unearned training fees
5,000
Training fees earned
5,000
Dec 31 (f)
Accounts receivable
7,500
Tuition fees earned
7,500
Dec 31 (g)
Salaries expense
400
Salaries payable
400
Dec 31 (h)
Rent expense
3,000
Prepaid Rent
3,000
2-a. Post the balance from the unadjusted trial balance and the adjusting entries in to the T-accounts.
Cash
Unadj. Bal
34,000
0
0
0
Adj. Bal
34,000
Equipment
Unadj. Bal
80,000
0
0
0
80,000
0
Accounts Receivable
Unadj. Bal
0
0
f
7,500
7,500
0
Accumulated Depreciation- Equipment
0
Unadj. Bal
15,000
c
13,200
Adj. Bal
28,200
Teaching Supplies
Unadj. Bal
8,000
5,200
2,800
Accounts Payable
0
Unadj. Bal
26,000
Adj. Bal
26,000
Prepaid Insurance
Unadj. Bal
12,000
a
2,400
Adj.Bal
9,600
Salaries Payable
Unadj. Bal
0
g
400
Adj. Bal
400
Prepaid Rent
Unadj. Bal
3,000
h
3,000
Adj. bal
0
0
Unearned Training Fee
Unadj. Bal
0
12,500
e
5,000
Adj.Bal
7,500
Professional Library
Unadj. Bal
35,000
0
Adj.Bal
35,000
0
T.wells Capital
Unadj. Bal
90,000
Adj.Bal
90,000
Accu Depreciation – Professional Library
Unadj. Bal
10,000
d
7,200
Adj.Bal
17,200
T.wells Withdrawals
Unadj. Bal
50,000
0
Adj.Bal
50,000
0
Tuition fees Earned
Unadj. Bal
0
123,900
f
7,500
Adj.Bal
13,400
Insurance Expense
Unadj. Bal
0
0
a
2,400
Adj.Bal
2,400
0
Training fees Earned
Unadj. Bal
0
40,000
e
5,000
Adj.Bal
45,000
Rent Expenses
Unadj. Bal
33,000
0
h
3,000
0
Adj.Bal
36,000
Depr Expense – Professional Library
Unadj. Bal
0
0
d
7,200
0
Adj.Bal
7,200
Teaching Supplies Expense
Unadj.Bal
0
0
b
5,200
Adj.Bal
5,200
0
Advertising Expense
Unadj.Bal
6,000
0
Adj.Bal
6,000
0
Salaries Expense
Unadj.Bal
50,000
0
g
400
Adj.Bal
50,400
0
Utilities Expense
Unadj.Bal
6,400
0
0
0
Adj.Bal
6,400
Adj.Bal: Adjusted Balance
Unadj.Bal: Unadjusted Balance
2-b. Prepare an adjusted trial balance.
3-a. Prepare Wells Technical Institute's income statement for the year 2017.
3-c. Prepare Wells Technical Institute's balance sheet as of December 31, 2017.
Date
General Journal
Debit
Credit
Dec 31 (a)
Insurance expense
2,400
Prepaid insurance
2,400
Dec 31 (b)
Teaching supplies expense
5,200
Teaching Supplies
5,200
Dec 31 (c)
Depreciation expense-Equipment
13,200
Accumulated depreciation- Equipment
13,200
Dec 31 (d)
Depreciation expense- Professional library
7,200
Accumulated depreciation-Professional library
7,200
Dec 31 (e)
Unearned training fees
5,000
Training fees earned
5,000
Dec 31 (f)
Accounts receivable
7,500
Tuition fees earned
7,500
Dec 31 (g)
Salaries expense
400
Salaries payable
400
Dec 31 (h)
Rent expense
3,000
Prepaid Rent
3,000
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.