Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

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, is found on the trial balance tab. 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.

An analysis of WTIs insurance policies shows that $2,400 of coverage has expired.

An inventory count shows that teaching supplies costing $2,800 are available at year-end 2017.

Annual depreciation on the equipment is $13,200.

Annual depreciation on the professional library is $7,200.

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.

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. (WTIs accruals are applied to the nearest half-month; for example, October recognizes one-half month accrual.)

WTIs 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

Income Statement Balance Sheet Inpact on net income

Trial Balance
December 31, 2017
Account Title Debit Credit
Cash 34,000
Accounts receivable 7,500
Teaching supplies 2,800
Prepaid insurance 9,600
Professional library 35,000
Accumulated depreciation - Professional library 17,200
Equipment 80,000
Accumulated depreciation - Equipment 28,200
Accounts payable 26,000
Salaries payable 400
Unearned training fees 7,500
T. Wells, Capital 90,000
T. Wells, Withdrawals 50,000
Tuition fees earned 131,400
Training fees earned 45,000
Depreciation expense - Professional library 7,200
Depreciation expense - Equipment 13,200
Salaries expense 50,400
Insurance expense 2,400
Rent expense 36,000
Teaching supplies expense 5,200
Advertising expense 6,000
Utilities expense 6,400
Total

a. Insurance

b. teaching supplies

c. depreciation - equipment

d. depreciation - library

e. training fees

f. tuition

g. salaries

h. rent

Total impact on income due to adjustments

Net income before adjustments

Net income after adjustments

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

Edp Auditing A Primer

Authors: Joseph L. Sardinas

1st Edition

0471123056, 978-0471123057

More Books

Students also viewed these Accounting questions