Question

Saved 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 $3,335 of coverage has expired. b. An inventory count shows that teaching supplies costing $2,891 are available at year-end. c. Annual depreciation on the equipment is $13,342. d. Annual depreciation on the professional library is $6,671. e. On September 1, WTI agreed to do five courses for a client for $2.700 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 $13,500 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, $9,653 of the tuition has been earned by WTI. g. WTI's two employees are paid weekly. As of the end of the year, Iwo 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

3A

3B

3C

Answer 1

Part a: Transaction a. General Journal Insurance expense Prepaid insurance Debit Credit 3,335 3,335 7,238 Teaching supplies expense Teaching supplies 7,238 10129-2891 c. 13,342 Depreciation expense-Equipment Accumulated depreciation Equipment 13,342 d. 6,671 Depreciation expense - Professional library Accumulated depreciation-Professional library 6,671 5,400 Unearned training fees Training fees earned 5,400 (2700*2) 9,653 Accounts receivable Tuition fees earned 9,653 400 Salaries expense Salaries payable 400 (100*2*2) 2,027 Rent expense Prepaid rent 2,027

Part 2a Cash 26,340 Equipment 98,000 Unadj. Bal. Un adj. Bal. Adj. Bal. 26,340 Adj. Bal. 98,000 Accounts Receivable Unadj. Bal. Accumulated Depreciation Equipment Un adj. Bal. 16,210 L c 13,342 9,653 Adj. Bal. L 9,653 Adj. Bal. 29.552 Accounts Payable Teaching Supplies 10,129 Unadj. Bal. Un adj. Bal. 26,000 238 Adj. Bal. 2,891 Adj. Bal. L 26,000 Salaries Payable Prepaid Insurance 15,197 Unadj. Bal. Un adj. Bal. 3,335 Adj. Bal. 11,862 Adj. Bal. Unearned Training Fees Prepaid Rent 2,027 Unadj. Bal. 1 Un adj. Bal. 13,500 2,027 5,400 Adj. Bal. Adj. Bal. 8,100 common stock Professional Library 30,391 Unadj. Bal. Un adj. Bal. 20,640 Adj. Bal. 30,391 Adj. Bal. 20,640 Accumulated Depreciation-Professional Library Unadj. Bal. 9,119 6,671 Dividends 40,523 Un adj. Bal. Adj. Bal. 15,790 Adj. Bal. 40,523

Tuition Fees Earned Insurance Expense Unadj. Bal. Un adj. Bal. 103,332 9,653 3,335 Adj. Bal. 112,985 Adj. Bal. 3,335 Training Fees Earned Unadj. Bal. Un adj. Bal. 38,496 5,400 Rent Expense 22,297 2,027 Adj. Bal. 43,896 Adj. Bal. 24,324 Teaching Supplies Expense 1 Depreciation Expense-Professional Library Unadj. Bal. 6,671 Un adj. Bal. 7,238 Adj. Bal. 6,671 Adj. Bal. 7,238 Depreciation Expense-Equipment Unadj. Bal. 13,3421 Advertising Expense 7,092 Un adj. Bal. Adj. Bal. 13,3421 Adj. Bal. 7,092 Unadj. Bal. Salaries Expense 48,628 400 Un adj. Bal. Utilities Expense 5,673 Adj. Bal. 49,028 Adj. Bal. 5,673 Retained earning Un adj. Bal. 79.000 Adj. Bal. 79,000

Part 2b WELLS TECHNICAL INSTITUTE Adjusted Trial Balance December 31. Credit Debit 26340 9,653 2,891 11,862 30,391 15,790 98,000 Cash Accounts receivable Teaching supplies Prepaid insurance Prepaid rent Professional library Accumulated depreciation-Professional library Equipment Accumulated depreciation-Equipment Accounts payable Salaries payable Unearned training fees common stock Retained earning Dividends 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 Totals 29,552 26,000 400 8,100 20,640 79,000 40,523 112,985 43,896 6,671 13,342 49,028 3,3351 24,324 7,238 7,092 5,673 336363 336363

WELLS TECHNICALINSTITUTE Income Statement For Year Ended December 31. Revenues Training fees earned 43,896 Tuition fees earned 112,985 WELLS TECHNICAL INSTITUTE Statement of retained earning For Year Ended December 31. Retained earning, at beg. Add: Net income 79,000 40,178 1E+05 40,523 78,655 Less: Dividends Retained earning, December 31. 156,881 Total revenues Expenses Depreciation expense-Equipment Salaries expense Insurance expense Rent expense Teaching supplies expense Utilities expense Advertising expense Depreciation expense - Professional library 13,342 49,028 3,335 24,324 7,238 5,673 7,092 6,671 Total expenses 116,703 Net income 40,178

WELLS TECHNICAL INSTITUTE Balance Sheet December 31 Assets Cash Accounts receivable Teaching supplies Prepaid insurance 26340 9,653 2,891 11,862 14601 Professional library Accumulated depreciation-Professional library Equipment Accumulated depreciation Equipment Total assets 30,391 - 15,790 98,000 -29,552 68448 133795 Liabilities Accounts payable Salaries payable Une arned training fees 26,000 400 8, 100 Total liabilities 34500 Equity common stock Retained earning 20,640 78,655 Total equity Total liabilities and equity 99,295 133,795