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 a. An analysis of WTI's insurance policies shows that $3,468 of coverage has expired. b. An inventory count shows that teaching supplies costing $3,006 are available at year-end. c. Annual depreciation on the equipment is $13,871. d. Annual depreciation on the professional library is $6,936. e. On September 1, WTI agreed to do five courses for a client for $2,400 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 $12,000 cash in advance for all five courses on September 1, and WTI credited Unearned Revenue. f. 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, $11,048 of the tuition revenue has been earned by WTI. g. 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. h. The balance in the Prepaid Rent account represents rent for December WELLS TECHNICAL INSTITUTE Unadjusted Trial Balance December 31 Credit Debit $ 28,151 10,826 16, 242 2,166 32,481 $ 9,746 102,000 Cash Accounts receivable Teaching supplies Prepaid insurance Prepaid rent Professional library Accumulated depreciation-Professional library Equipment Accumulated depreciation-Equipment Accounts payable Salaries payable Unearned revenue Common stock Retained earnings Dividends Tuition revenue Training revenue Depreciation expense-professional library Depreciation expense-Equipment Salaries expense Insurance expense Rent expense Teaching supplies expense Advertising expense Utilities expense Totals 17,325 26,000 0 12,000 27,964 80,000 43,310 110,438 41,143 0 0 51,972 0 23,826 0 7,579 6,063 $324,616 $324,616 Required: 1. Prepare the necessary adjusting journal entries for items a through h. Assume that adjusting entries are made only at year-end. View transaction list View journal entry worksheet No Transaction General Journal Debit Credit 1 a. Insurance expense 3,468 Prepaid insurance 3,468 2 b. 3,006 Teaching supplies expense Teaching supplies 3,006 C. 13,871 Depreciation expense-Equipment Accumulated depreciation Equipment 13,871 4 d. 6,936 Depreciation expenseProfessional library Accumulated depreciationProfessional library 6,936 5 e. 4,800 Unearned revenue Training revenue 4,800 6 f. Accounts receivable 11,048 Tuition revenue 11,048 7 g. 400 Salaries expense Salaries payable 400 8 h. Rent expense 2,166 Prepaid rent 2,166 Prepare an adjusted trial balance. WELLS TECHNICAL INSTITUTE Adjusted Trial Balance December 31 Debit Credit Cash $ Accounts receivable 28,151 11,048 7,820 12,774 0 Teaching supplies Prepaid insurance Prepaid rent Professional library Accumulated depreciationProfessional library Equipment Accumulated depreciation Equipment Accounts payable Salaries payable Unearned revenue 32,481 16,682 102,000 31,196 26,000 400 Common stock 7,200 27,964 80,000 43,310 121,486 45,943 Retained earnings Dividends Tuition revenue Training revenue Depreciation expenseProfessional library Depreciation expense-Equipment Salaries expense Insurance expense Rent expense Teaching supplies expense Advertising expense Utilities expense Totals 6,936 13,871 52,372 3,468 25,992 3,006 7,579 6,063 373,553 $ $ 340,189
