Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Problem 3-3A Preparing adjusting entries, adjusted trial balance, and financial statements LO A1, P1, P2, P3 [The following information applies to the questions displayed below.]

Problem 3-3A Preparing adjusting entries, adjusted trial balance, and financial statements LO A1, P1, P2, P3

[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. 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

An analysis of WTI's insurance policies shows that $2,542 of coverage has expired.

An inventory count shows that teaching supplies costing $2,204 are available at year-end 2017.

Annual depreciation on the equipment is $10,170.

Annual depreciation on the professional library is $5,085.

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 $2,600, 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 $2,399 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.

WELLS TECHNICAL INSTITUTE Unadjusted Trial Balance December 31, 2017
Debit Credit
Cash $ 28,000
Accounts receivable 0
Teaching supplies 10,768
Prepaid insurance 16,155
Prepaid rent 2,155
Professional library 32,307
Accumulated depreciationProfessional library $ 9,693
Equipment 75,368
Accumulated depreciationEquipment 17,232
Accounts payable 37,613
Salaries payable 0
Unearned training fees 13,000
T. Wells, Capital 68,493
T. Wells, Withdrawals 43,078
Tuition fees earned 109,846
Training fees earned 40,923
Depreciation expenseProfessional library 0
Depreciation expenseEquipment 0
Salaries expense 51,694
Insurance expense 0
Rent expense 23,705
Teaching supplies expense 0
Advertising expense 7,539
Utilities expense 6,031
Totals $ 296,800 $ 296,800

Problem 3-3A Part 2

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.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

More Books

Students also viewed these Accounting questions