Wells Technical Institute (WTI), a school owned by Tristana Wells, provides trai
ID: 2394712 • 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 athrough h that require adjusting entries on December 31, 2017, follow.
Additional Information Items
An analysis of WTI's insurance policies shows that $4,129 of coverage has expired.
An inventory count shows that teaching supplies costing $3,578 are available at year-end 2017.
Annual depreciation on the equipment is $16,515.
Annual depreciation on the professional library is $8,258.
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 $2,900, 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 $5,220 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.
Problem 3-3A Part 1
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 $ 27,547 Accounts receivable 0 Teaching supplies 10,594 Prepaid insurance 15,894 Prepaid rent 2,120 Professional library 31,784 Accumulated depreciation—Professional library $ 9,537 Equipment 74,152 Accumulated depreciation—Equipment 16,954 Accounts payable 35,294 Salaries payable 0 Unearned training fees 14,500 T. Wells, Capital 67,385 T. Wells, Withdrawals 42,381 Tuition fees earned 108,069 Training fees earned 40,261 Depreciation expense—Professional library 0 Depreciation expense—Equipment 0 Salaries expense 50,858 Insurance expense 0 Rent expense 23,320 Teaching supplies expense 0 Advertising expense 7,417 Utilities expense 5,933 Totals $ 292,000 $ 292,000
Explanation / Answer
Solution 1:
Wells Technical Institute - Adjusting Journal Entries S. No Particulars Debit Credit a Insurance Expense Dr $4,129.00 To Prepaid Insurance $4,129.00 (Being insurance expense recoganized) b Teaching Supplies Expenses Dr ($10,594 - $3,578) $7,016.00 To Teaching Supplies $7,016.00 (Being Teaching supplies expenses recorded) c Depreciation Expense - Equipment Dr $16,515.00 To Accumulated Depreciation - Equipment $16,515.00 (Being Annual depreciation expense on equipment recorded) d Depreciation Expense - Professional Library Dr $8,258.00 To Accumulated Depreciation - Professional Library $8,258.00 (Being Annual depreciation expense on Prof. library recorded) e Unearned Trainng Fees Dr ($2900*2) $5,800.00 To Traning Fees earned $5,800.00 (Being amount of training fees earned recorded) f Accounts Receivables Dr $13,050.00 To Tution fees earned (5220*2.5) $13,050.00 (Being Tution fees earned for 2.5 months recorded) g Salaries Expenses Dr ($100*2*2) $400.00 To Salaries Payable $400.00 (Being Salaries expense due for 2 days for 2 employees recorded) h Rent Expense Dr $2,120.00 To Prepaid Rent $2,120.00 (Being rent expense for december recorded)Related Questions
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