Question

Required information [The following information applies to the questions displayed below.) 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 $3,732 of coverage has expired. b. An inventory count shows that teaching supplies costing $3,235 are available at year-end. c. Annual depreciation on the equipment is $14,929. d. Annual depreciation on the professional library is $7,464. e. On September 1, WTI agreed to do five courses for a client for $2,300 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 $11,500 cash in advance for all five courses on September 1, and WTI credited Unearned Training Fees. 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, $12,600 of the tuition 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 Cash Accounts receivable Debit $ 27,547 0

Answer 1

Adjusting Entries:

	Date	Account Titles and Explanation	Debit	Credit
a)	December 31.	Insurance Expense	$3,732
		Prepaid Insurance		$3,732
		(To record the expiration of insurance expense)
b)	December 31.	Teaching Supplies Expense	$7,359
		Teaching Supplies ($10,594 - $3,235)		$7,359
		(To record the usage of supplies)
c)	December 31.	Depreciation Expense	$14,929
		Accumulated Depreciation - Equipment		$14,929
		(To record the depreciation on the equipment)
d)	December 31.	Depreciation Expense	$7,464
		Accumulated Depreciation - Professional Library		$7,464
		(To record the depreciation on the professional library)
e)	December 31.	Unearned Training Fees ($2,300 * 2)	$4,600
		Training Fees Revenue		$4,600
		(To record the expiration of revenue earned)
f)	December 31.	Accounts Receivable	$12,600
		Tuition Fees Revenue		$12,600
		(To record the tuition fees earned and due)
g)	December 31.	Salaries Expense (2 employees * 2 days * $100 per day)	$400
		Salaries Payable		$400
		(To record the salaries accrued at the end of year)
h)	December 31.	Rent Expense	$2,120
		Prepaid Rent		$2,120
		(To record the expiration of rent expense)