Problem 3-3A Preparing adjusting entries, adjusted trial balance, and financial statements LO P1, P2, P3, P4, P5, P6

Skip to question

[The following information applies to the questions displayed below.] 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. WTI initially records prepaid expenses and unearned revenues in balance sheet accounts. Its unadjusted trial balance as of December 31 follows along with descriptions of items a through h that require adjusting entries on December 31. Additional Information Items

1. An analysis of WTI's insurance policies shows that $3,468 of coverage has expired.
2. An inventory count shows that teaching supplies costing $3,006 are available at year-end.
3. Annual depreciation on the equipment is $13,871.
4. Annual depreciation on the professional library is $6,936.
5. On September 1, WTI agreed to do five courses for a client for $2,700 each. Two courses will start immediately and finish before the end of the year. Three courses will not begin until next year. The client paid $13,500 cash in advance for all five courses on September 1, and WTI credited Unearned Training Fees.
6. On October 15, WTI agreed to teach a four-month class (beginning immediately) for an executive with payment due at the end of the class. At December 31, $10,298 of the tuition has been earned by WTI.
7. 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.
8. The balance in the Prepaid Rent account represents rent for December.

WELLS TECHNICAL INSTITUTE Unadjusted Trial Balance December 31
	Debit			Credit
Cash	$	28,302
Accounts receivable		0
Teaching supplies		10,884
Prepaid insurance		16,329
Prepaid rent		2,178
Professional library		32,655
Accumulated depreciationProfessional library				$	9,798
Equipment		102,000
Accumulated depreciationEquipment					17,418
Accounts payable					23,000
Salaries payable					0
Unearned training fees					13,500
Common stock					24,705
Retained earnings					85,000
Dividends		43,542
Tuition fees earned					111,030
Training fees earned					41,364
Depreciation expenseProfessional library		0
Depreciation expenseEquipment		0
Salaries expense		52,251
Insurance expense		0
Rent expense		23,958
Teaching supplies expense		0
Advertising expense		7,620
Utilities expense		6,096
Totals	$	325,815		$	325,815

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.

• Annual depreciation on the equipment is $13,871.

Note: Enter debits before credits.

Transaction	General Journal	Debit	Credit
c.