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
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 $2,674 of coverage has expired.
- An inventory count shows that teaching supplies costing $2,318 are available at year-end.
- Annual depreciation on the equipment is $10,698.
- Annual depreciation on the professional library is $5,349.
- On September 1, WTI agreed to do five training 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 training courses on September 1, and WTI credited Unearned Revenue.
- 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, $6,653 of the tuition revenue 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 $ 27,396 Accounts receivable 0 Teaching supplies 10,536 Prepaid insurance 15,806 Prepaid rent 2,108 Professional library 31,610 Accumulated depreciationProfessional library $ 9,484 Equipment 95,000 Accumulated depreciationEquipment 16,861 Accounts payable 21,000 Salaries payable 0 Unearned revenue 13,000 T. Wells, Capital 103,787 T. Wells, Withdrawals 42,149 Tuition revenue 107,477 Training revenue 40,040 Depreciation expenseProfessional library 0 Depreciation expenseEquipment 0 Salaries expense 50,579 Insurance expense 0 Rent expense 23,188 Teaching supplies expense 0 Advertising expense 7,376 Utilities expense 5,901 Totals $ 311,649 $ 311,649 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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