Question

Required information The following information applies to the questions displayed below) Wells Technical Institute WTA a school owned by Tristana Wells, provides training to individuals who pay tution directly to the school. WTI also offers training to groups in off-site locations. WTI nally records prepaid expenses and unearned revenues in balance sheet accounts. Its unad usted trial balance as of December 31 follows along with descriptions of items a through that require adjusting entries on December 31 Additional Information Items a. An analysis of WTFS insurance cocles shows that $3.500 o' coverage has expired b. An Inventory count shows that teaching Subs cost ng $3120 are available at year-end, c. Annual depreciation on the equipment is $14,400. d. Annual depreciation on the professional library's $7200 e. On September 1 WTI agreed to do five courses for a client for $2.500 each. TWO courses w start mediately and finish before the end of the year, Three Courses will not begin unt next year. The client paid $12.500 cash in advance for all five courses on September 1, and WTI credited Uneamed Training Fees f. On October 15, WTI agreed to teach a four-month class beginning Immediately or an execut ve with payment due at the end of the class. Al December 31, $11.490 of the tult on has been earned by WTL 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 Credit $ 9,171 16,303 27,000 WELLS TECHNICAL INSTITUTE Unad usted Trial Balance December 31 Debit Caah $ 26,491 Accounts receivable Teaching supplies 10,187 Prepaid insurance 15,284 Prepaid rent 2,039 Professional Library 30,565 Accumulated depreciation Professional Library Equipment 99,000 Accumulated depreciation Equipment Accounts payable Salaries payable Unearned training fees Common atoek Retained earnings Dividends 40,755 Tuition fees earned Training fees earned Depreciation expense Professional Library Depreciation expense Equipment Salaries expense 43,907 Insurance expense Rent expense 22,429 Teaching supplies expense Advertising expense 7,132 Utilities expense 5,706 Totals $308,495 12,500 23.se 77,000 103,924 38,717 $308,495

Answer 1

Adjusting Entries: EVENT CREDIT $3,600 ($10187 - $3120] $7,067 $14,400 DATE ACCOUNT TITLES DEBIT Dec. 31 Insurance Expense $3,600 Prepaid Insurance Dec. 31 Teaching Supplies Expense $7,067 Teaching Supplies Dec. 31 Depreciation Expense - Equipment $14,400 Accumulative Depreciation - Equipment Dec. 31 Depreciation Expense - Professional Library $7,200 Accumulative Depreciation - Professional Library Dec. 31 Unearned Training Fee $5,000 Training Fees Earned Dec. 31 Accounts Receivable $11,450 Tuition Fees Earned Dec. 31 Salaries Expense $400 Salaries Payable Dec. 31 Rent Expense $2,039 Prepaid Rent $7,200 [$2,500 x 2 courses] $5,000 $11,450 (For Oct 15 thru Dec. 31, it is earned) $400 [2 exployees x 2 days x $100] $2,039

Cash $26,491 $26,491 Unadj. bal. Adj. bal. Salaries Payable Unadj. bal. Professional Library $30,565 $30,565 Unadj. bal. Adj. bal. $0 $400 $400 Adj. bal. Unadj. bal. Accounts Receivable $0 $11,450 $11,450 Accumulated Depreciation - Professional Library Unadj. bal. $9,171 $7,200 Adj. bal. $16,371 d) Unearned Training Fee $5,000 Unadj. bal. Adj. bal. $12,500 $7,500 Adj. bal. Teaching Supplies $10,187 b) $3,120 Unadj. bal. Adj. bal. $7,067 Unadj. bal Adj. bal. Equipment $99,000 $99,000 Common Stock Unadj. bal. $23,880 Adj. bal. $23,880 Accumulated Depreciation - Equipment Unadj. bal. $16,303 $14,400 Adj. bal. $30,703 Perpaid Insurance $15,284 a) $11,684 Unadj. bal. Adj. bal. Dividends $40,755 $40,755 Unadj. bal. Adj. bal. $3,600 Perpaid Rent $2,039 h) Retained Earnings Unadj. bal. $77,000 Adj. bal. $77,000 $2,039 Accounts Payable Unadj. bal. Adj. bal. Unadj. bal. Adj. bal. $0 $27,000 $27,000

Tution Fees Earned Unadj. bal. $103,924 $11,450 $115,374 Teaching Supplies Expense Unadj. bal $0 b) $7,067 Adj. bal. $7,067 Adj. bal. Training Fees Earned Unadj. bal. $38,717 $5,000 $43,717 Rent expense Unadj. bal $22,429 $2,039 Adj. bal. $24,468 h) Adj. bal. $0 Depreciation Expense - Prof. Library Unadj. bal. $7,200 Adj. bal. $7,200 Advertising Expense Unadj. bal $7,132 Adj. bal. $7,132 d) Unadj. bal Adj. bal. Utilities Expense $5,706 $5,706 $0 Depreciation Expense - Equipment Unadj. bal. $14,400 Adj. bal. $14,400 Insurance expense Unadj. bal $0 $3,600 Adj. bal. $3,600 a) Salaries Expense $48,907 $400 $49,307 Unadj. bal. Adj. bal.

3A) $159,091 WELLS TECHNICAL INSTITUTE Adjusted Trial Balance December 31 ACCOUNT TITLES Cash Accounts Receivable Teaching Supplies Perpaid Insurance Professional Library Accumulated Depreciation - Professional Library Equipment Accumulated Depreciation - Equipment Accounts Payable Salaries Payable Unearned Training Fee Common Stock Retained Earnings Dividends Tution Fees Earned Training Fees Earned Depreciation Expense - Prof. Library Depreciation Expense - Equipment Salaries Expense Insurance expense Rent expense Teaching Supplies Expense Advertising Expense Utilities Expense TOTALS DEBIT CREDIT $26,491 $11,450 $3,120 $11,684 $30,565 $16,371 $99,000 $30,703 $27,000 $400 $7,500 $23,880 $77,000 $40,755 $115,374 $43,717 $7,200 $14,400 $49,307 $3,600 $24,468 $7,067 $7,132 $5,706 $341,945 $341,945 WELLS TECHNICAL INSTITUTE Income Statement For the Year Ended December 31 Revenues: Tution Fees Earned $115,374 Training Fees Earned $43,717 Total Revenues Expenses: Depreciation Expense - Prof. Library $7,200 Depreciation Expense - Equipment $14,400 Salaries Expense $49,307 Insurance expense $3,600 Rent expense $24,468 Teaching Supplies Expense $7,067 Advertising Expense $7,132 Utilities Expense $5,706 Total Expenses Net Income $118,880 $40,211 3B) WELLS TECHNICAL INSTITUTE Statement of Retained Earnings For the Year Ended December 31 Retained Earnings - Beginning Balance Add: Net Income $40,211 Less: Dividends -$40,755 Net increase in retained earnings Retained Earnings - Ending Balance $77,000 [Ref: Income Statement] $544 $76,456

3C) Assets Current Assets: Cash Accounts Receivable Teaching Supplies Perpaid Insurance Total Current Assets Property, Plant and Equipment: Professional Library Accumulated Depreciation - Professional Library Equipment Accumulated Depreciation - Equipment Property, Plant and Equipment, Net Total Assets WELLS TECHNICAL INSTITUTE Balance Sheet December 31 Liabilities & Shareholders' Equity Current Liabilities: $26,491 Accounts Payable $27,000 $11,450 Salaries Payable $400 $3,120 Unearned Training Fee $7,500 $11,684 Total Liabilities $52,745 Shareholders' Equity: $30,565 Common Stock $23,880 $16,371 $14,194 Retained Earnings $76,456 $99,000 Shareholders' Equity $30,703 $68,297 $82,491 $135,236 Total Liabilities & Shareholders' equity $34,900 $100,336 $135,236