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

1. An analysis of WTI's insurance policies shows that $3,468 of coverage has expired.
2. An inventory count shows that teaching supplies costing $3,006 are available at year-end.
3. Annual depreciation on the equipment is $13,871.
4. Annual depreciation on the professional library is $6,936.
5. On September 1, WTI agreed to do five courses for a client for $2,600 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 $13,000 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, $10,548 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	$	27,698
Accounts receivable		0
Teaching supplies		10,652
Prepaid insurance		15,981
Prepaid rent		2,132
Professional library		31,958
Accumulated depreciation—Professional library				$	9,589
Equipment		74,555
Accumulated depreciation—Equipment					17,046
Accounts payable					37,068
Salaries payable					0
Unearned training fees					13,000
T. Wells, Capital					67,754
T. Wells, Withdrawals		42,613
Tuition fees earned					108,661
Training fees earned					40,482
Depreciation expense—Professional library		0
Depreciation expense—Equipment		0
Salaries expense		51,136
Insurance expense		0
Rent expense		23,452
Teaching supplies expense		0
Advertising expense		7,457
Utilities expense		5,966
Totals	$	293,600		$	293,600

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

Answer 1

Adjusting Entries
Event	Particulars					Debit	Credit
a)	Insurance Expense					$   3,468.00
	To Prepaid Insurance						$   3,468.00
b)	Teaching Supplies Expense					$   7,646.00
	To Teaching Supplies						$   7,646.00
	($ 10652 - $ 3006)
c)	Depreciation expense—Equipment					$ 13,871.00
	To Accumulated Depreciation - Equipment						$ 13,871.00
d)	Depreciation expense—Professional library					$   6,936.00
	To Accumulated Depreciation - Professional library						$   6,936.00
e)	Unearned training fees					$   5,200.00
	To Training fees earned						$   5,200.00
	($ 13000 x 2/5)
f)	Accounts Receivable					$ 10,548.00
	To Tuition fees earned						$ 10,548.00
g)	Salaries Expense					$      400.00
	To Salaries Payable						$      400.00
	($ 100 x 2 x 2)
h)	Rent Expense					$   2,132.00
	To Prepaid Rent						$   2,132.00

Are these correct?