Question

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 $3,600 of coverage has expired.
2. An inventory count shows that teaching supplies costing $3,120 are available at year-end.
3. Annual depreciation on the equipment is $14,400.
4. Annual depreciation on the professional library is $7,200.
5. 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 Revenue.
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, $10,950 of the tuition revenue 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	$	26,944
Accounts receivable		0
Teaching supplies		10,362
Prepaid insurance		15,545
Prepaid rent		2,073
Professional library		31,088
Accumulated depreciation—Professional library				$	9,328
Equipment		104,000
Accumulated depreciation—Equipment					16,582
Accounts payable					24,000
Salaries payable					0
Unearned revenue					13,500
Common stock					32,577
Retained earnings					76,000
Dividends		41,452
Tuition revenue					105,701
Training revenue					39,379
Depreciation expense—Professional library		0
Depreciation expense—Equipment		0
Salaries expense		49,743
Insurance expense		0
Rent expense		22,803
Teaching supplies expense		0
Advertising expense		7,254
Utilities expense		5,803
Totals	$	317,067		$	317,067

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

Answer 1

Adjusting entry

No	General Journal	Debit	Credit
a	Insurance expense	3600
	Prepaid insurance		3600
b	Teaching supplies expense (10362-3120)	7242
	Teaching supplies		7242
c	Depreciation expense	14400
	Accumulated depreciation-equipment		14400
d	Depreciation expense	7200
	Accumulated depreciation-Professional library		7200
e	Unearned revenue (13500/5*2)	5400
	Training revenue		5400
f	Account receivable	10950
	Tuition revenue		10950
g	Salaries expense (100*2*2)	400
	Salaries payable		400
h	Rent expense (	2073
	Prepaid rent		2073