Question

Required information

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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

1. An analysis of WTI's insurance policies shows that $4,129 of coverage has expired.
2. An inventory count shows that teaching supplies costing $3,578 are available at year-end.
3. Annual depreciation on the equipment is $16,515.
4. Annual depreciation on the professional library is $8,258.
5. On September 1, WTI agreed to do five courses for a client for $2,200 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 $11,000 cash in advance for all five courses on September 1, and WTI credited Unearned Training Fees.
6. 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, $14,800 of the tuition has been earned by WTI.
7. 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.
8. The balance in the Prepaid Rent account represents rent for December.

WELLS TECHNICAL INSTITUTE Unadjusted Trial Balance December 31
	Debit			Credit
Cash	$	28,000
Accounts receivable		0
Teaching supplies		10,768
Prepaid insurance		16,155
Prepaid rent		2,155
Professional library		32,307
Accumulated depreciation—Professional library				$	9,693
Equipment		98,000
Accumulated depreciation—Equipment					17,232
Accounts payable					22,000
Salaries payable					0
Unearned training fees					11,000
Common stock					23,738
Retained earnings					85,000
Dividends		43,078
Tuition fees earned					109,846
Training fees earned					40,923
Depreciation expense—Professional library		0
Depreciation expense—Equipment		0
Salaries expense		51,694
Insurance expense		0
Rent expense		23,705
Teaching supplies expense		0
Advertising expense		7,539
Utilities expense		6,031
Totals	$	319,432		$	319,432

Required:
1. Prepare the necessary adjusting journal entries for items a through h. Assume that adjusting entries are made only at year-end.

Journal entry worksheet 2 3 4 5 6 7 8 An analysis of WTI's insurance policies shows that $4,129 of coverage has expired. Note: Enter debits before credits. Transaction General Journal Debit Credit Record entry Clear entry View general journal

Answer 1

Adjusting entry

No	Account and explanation	Debit	Credit
1	Insurance expense	4129
	Prepaid insurance		4129
2	Teaching Supplies expense (10768-3578)	7190
	Teaching Supplies		7190
3	Depreciation expense	16515
	Accumulated depreciation-equipment		16515
4	Depreciation expense	8258
	Accumulated depreciation-Professional library		8258
5	Unearned training fees	4400
	Training fees earned		4400
6	Account receivable	14800
	Tuition fees earned		14800
7	Salaries expense	400
	Salaries payable		400
8	Rent expense	2155
	Prepaid rent		2155