Question

0 Required information Problem 3-3A Preparing adjusting entries, adjusted trial balance, and financial statements LO P1, P2, P3, P4, P6 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 $3.996 of coverage has expired. b. An inventory count shows that teaching supplies costing $3.464 are available at year-end. c. Annual depreciation on the equipment is $15,986, d. Annual depreciation on the professional library is $7.993. 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, $12,903 of the tuition has been earned by WTI. 9. 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 Debit $ 26,793 10,304 15,458 2,062 30,913 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 T. Wells, Capital $ 9,275 72,119 16,489 34,931 13,500 65,539

Answer 1

Adjusting Entries:

Transaction	Account title and explanation	Debit	Credit
a	Insurance expense	$3,996
	Prepaid insurance		$3,996
	[To record insurance expense]
b	Teaching Supplies expense [10304-3464]	$6,840
	Teaching Supplies		$6,840
	[To record supplies expense]
c	Depreciation expense-Equipment	$15,986
	Accumulated depreciation-Equipment		$15,986
	[To record depreciation expense on equipment]
d	Depreciation expense-professional library	$7,993
	Accumulated depreciation-professional library		$7,993
	[To record depreciation expense on professional library]
e	Unearned training fees	$5,400
	Training fees [$2,700 x 2 courses]		$5,400
	[To record fees earned from unearned]
f	Accounts receivable	$12,903
	Tuition fees earned		$12,903
	[To record accrued tuition fees earned]
g	Salaries expense [$100 x 2 days x 2 employees]	$400
	Salaries payable		$400
	[To record accrued salaries]
h	Rent Expense	$2,062
	Prepaid rent		$2,062
	[To record rent expense]