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GLO302 - Based on Problem 3-3A LO P1, P2, P3, P4, P6 Allen Technical Institute (ATI), a school owned by Susan Allen, provides training to individuals who pay tuition directly to the school. ATI also offers training to groups in off-site locations. Its unadjusted trial balance as of December 31, is found on the trial balance tab. ATI initially records prepaid expenses and unearned revenues in balance sheet accounts. Descriptions of items a through h that require adjusting entries on December 31. a. An analysis of ATI's insurance policies shows that $2,650 of coverage has expired. b. An inventory count shows that teaching supplies costing $3,440 are available at year-end. c. Annual depreciation on the equipment is $6,400. d. Annual depreciation on the professional library is $12,200. e. On September 1, ATI 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 ATI credited Unearned Training Fees. f. On October 15, ATI agreed to teach a four- month class (beginning immediately) for an executive with payment due at the end of the class. At December 31, $8,500 of the tuition has been earned by ATI. g. ATI's two employees are paid weekly. As of the end of the year, two days' salaries have accrued at the rate of $220 per day for each employee. h. The balance in the Prepaid Rent account represents rent for December. Answer is not complete. Requirement General Journal General Ledger Trial Balance Income Statement St Owner Equity Balance Sheet Impact on income For transactions a-h, review the unadjusted balance and prepare the adjusting entry necessary to correctly report the revenue earned or the expense incurred. Each adjustment is posted automatically to the general ledger and trial balan as soon as you click "record entry". No Account Title Debit Credit Date Dec 31 1 2,650 Insurance expense Prepaid insurance 2,650 2 Dec 31 5,360 Teaching supplies expense Teaching supplies 5,360 3 Dec 31 6,400 Depreciation expense - Equipment Accumulated depreciation - Equipment 6,400 4 Dec 31 12,200 Depreciation expense - Professional library Accumulated depreciation - Professional library 12,200 5 Dec 31 5,200 Unearned training fees Training fees earned 5,200 Dec 31 8,500 Accounts receivable Tuition fees earned 8,500 7 Dec 31 880 Salaries expense Salaries payable 880 8 Dec 31 3,400 Rent expense Prepaid rent 3,400 Adjusted Allen Technical Institute Trial Balance December 31, 2019 Account Title Debit Credit IS Cash Accounts receivable 52.425 8,500 3,440 5,300 61,000 36,600 64,000 19,200 30,800 880 7,800 92.000 Teaching supplies Prepaid insurance Professional library Accumulated depreciation - Professional library Equipment Accumulated depreciation - Equipment Accounts payable Salaries payable Unearned training fees S. Allen, Capital s. Allen, Withdrawals Tuition fees earned Training fees earned Depreciation expense - Professional library Depreciation expense - Equipment Salaries expense Insurance expense Rent expense Teaching supplies expense Advertising expense Utilities expense 50,900 140,500 49,200 12,200 6,400 51,280 2,650 40,800 5,360 6,125 6,600 376,980 S Total $ 376,980 Answer is not complete. Requirement General Journal General Ledger Trial Balance Income Statement St Owner Equity Balance Sheet Impact on income Use the drop-downs to select the accounts properly included on the income statement. The unadjusted or adjuste balances will appear for each account, based on your selection. Adjusted Allen Technical Institute Income Statement For Year Ended December 31 Revenues Training fees earned Tuition fees earned 49,200 140,500 0 $ 189,700 7 Total revenues Expenses Depreciation expense - Professional library Depreciation expense - Equipment Salaries expense Insurance expense Rent expense Teaching supplies expense Advertising expense Utilities expense 12,200 6,400 51,280 2,650 40,800 5,360 6,125 6,600 0 0 Total expenses Net income 131,415 58,285 $ Allen Technical Institute Balance Sheet December 31 Assets Current assets Cash Accounts receivable Teaching supplies Prepaid insurance 144 52,425 8,500 3,440 5,300 0 0 S 69,665 Total current assets Plant assets Professional library Accumulated depreciation - Professional library Professional library, net 61,000 (36,600) 24,400 0 0 0 24,400 94,065 Total assets S Liabilities Current liabilities Accounts payable Salaries payable Unearned training fees 30,800 880 7,800 0 Total liabilities $ 39,480 Equity S. Allen, Capital 99,385 Total equity Total Liabilities & Equity 99,385 138,865 $ * Answer is not complete. Requirement General Journal General Ledger Trial Balance Income Statement St Owner Equity Balance Sheet Impact on income For each adjustment, indicate the income statement and balance sheet account affected, and the impact on net income. If an adjustment caused net income to decrease, enter the amount as a negative value. Net income before adjustments can be found on the income statement tab. (Hint: Select unadjusted on the drop-down.) Show le Adjusted Impact on net income $ (2,650) (5,360) (6,400) (12,200) Account affecting the: Adjusting entry related to: Income statement Balance Sheet a. Insurance Insurance expense Prepaid insurance b. Teaching supplies Teaching supplies expense Teaching supplies C. Depreciation - Depreciation expense - Accumulated depreciation - equipment Equipment Equipment d. Depreciation - library Depreciation expense - Accumulated depreciation - Professional library Professional library e. Training fees Training fees earned Unearned training fees f. Tuition Tuition fees earned Accounts receivable g. Salaries Salaries expense Salaries payable h. Rent Rent expense Prepaid rent Total impact on income due to adjustments Net income before adjustments Net income after adjustments Had the adjustments not been prepared, income would have been overstated by 5,200 8,500 (880) (3,400) $ (17,190) 75,475 S 58,285 29.49%
