Question
Required information [The following information applies to the questions displayed below.] Wells Technical Institute (WTI), a school owned by Tristana Wells, provides training to individuals
Required information
[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
- An analysis of WTI's insurance policies shows that $3,468 of coverage has expired.
- An inventory count shows that teaching supplies costing $3,006 are available at year-end.
- Annual depreciation on the equipment is $13,871.
- Annual depreciation on the professional library is $6,936.
- On September 1, WTI agreed to do five courses for a client for $2,600 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 $13,000 cash in advance for all five courses on September 1, and WTI credited Unearned Training Fees.
- 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, $10,548 of the tuition has been earned by WTI.
- 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 | |||||
Debit | Credit | ||||
Cash | $ | 27,698 | |||
Accounts receivable | 0 | ||||
Teaching supplies | 10,652 | ||||
Prepaid insurance | 15,981 | ||||
Prepaid rent | 2,132 | ||||
Professional library | 31,958 | ||||
Accumulated depreciationProfessional library | $ | 9,589 | |||
Equipment | 74,555 | ||||
Accumulated depreciationEquipment | 17,046 | ||||
Accounts payable | 37,068 | ||||
Salaries payable | 0 | ||||
Unearned training fees | 13,000 | ||||
T. Wells, Capital | 67,754 | ||||
T. Wells, Withdrawals | 42,613 | ||||
Tuition fees earned | 108,661 | ||||
Training fees earned | 40,482 | ||||
Depreciation expenseProfessional library | 0 | ||||
Depreciation expenseEquipment | 0 | ||||
Salaries expense | 51,136 | ||||
Insurance expense | 0 | ||||
Rent expense | 23,452 | ||||
Teaching supplies expense | 0 | ||||
Advertising expense | 7,457 | ||||
Utilities expense | 5,966 | ||||
Totals | $ | 293,600 | $ | 293,600 | |
Required: 1. Prepare the necessary adjusting journal entries for items a through h. Assume that adjusting entries are made only at year-end.
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