Question

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 (WT), a school owned by Tristana Wells, provides training to individuals who pay tultion 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 that require adjusting entries on December 31. Additional Information Items a. An analysis of Wil's insurance policies shows that $3,864 of coverage has expired. b. An inventory count shows that teaching supplies costing $3,349 are available at year-end. c. Annual depreciation on the equipment is $15,458. d. Annual depreciation on the professional library is $7,729. e. On September 1, WTI agreed to do five courses for a client for $3,000 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 $15,000 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, $11,500 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. Credit $ 9,066 WELLS TECHNICAL INSTITUTE Unadjusted Trial Balance December 31 Debit Cash $ 26,199 Accounts receivable 0 Teaching supplies 10,071 Prepaid insurance 15, 110 Prepaid rent 2,015 Professional library 30,217 Accumulated depreciation- Professional library Equipment 70,500 Accumulated depreciation Equipment Accounts payable Salaries payable Unearned training fees T. Wells, Capital T. Wells, withdrawala 40,291 Tuition fees carned Training fees earned Depreciation expense- 0 Professional library Depreciation expense Equipment 0 Salaries expense 48,350 Insurance expense 0 Rent expense 22,165 Teaching supplies expense 0 Advertising expense 7,051 Utilities expense 5,641 Totals $277,600 16, 117 32,340 0 15,000 64,062 102,740 38,275 $277,600 Problem 3-3A Part 2

Answer 1

Adjusting entries

WTI Wells Technical Institute Journal entries No. Account Insurance expense Prepaid Insurance Credit Calculation Debit $ 3,864 a $ 3,864 b $ 6,722 10071-3349 Teaching Supplies expense Teaching Supplies $ 6,722 с $ 15,458 Depreciation expense- Equipment Accumulated Depreciation-Equipment $ 15,458 d $ 7,729 Depreciation expense- Prof Library Accumulated Depreciation Professional Library $ 7,729 e $ 6,000 3000*2 Unearned Training Fees Training fees eanred $ 6,000 f $ 11,500 Accounts Receivable Tuition fees eanred $ 11,500 g $ 400 =100*2*2 Salaries expense Salaries Payable $ 400 h $ 2,015 Rent expense Prepaid Rent $ 2,015

Wells Technical Institute T Accounts Date Debit Date Credit Credit Cash Date Debit Date Equipment Unadj Bal $ 70,500 Unadj Bal $ 26,189 Adj Bal $ 26,189 Accounts Receivable Unadj Bal $ 31-Dec $ 11,500 Adj Bal $ 70,500 Accum. Depr. - Equipment Unadj Bal $ 16,117 31-Dec $ 15,458 Adj Bal $ 11,500 Teaching Supplies $ 10,071 31-Dec $ Adj Bal $ 31,575 Accounts Payable Unadj Bal $32,340 Unadj Bal 6,722 Adj Bal Adj Bal $ 3,349 Prepaid Insurance $ 15,110 31-Dec $ $ 32,340 Salaries Payable Unadj Bal $ 31-Dec $ 400 Unadj Bal 3,864 Adj Bal $ 11,246 Prepaid Rent $ 2,015 31-Dec $ Adj Bal $ 400 Unearned Training Fees Unadj Bal $ 15,000 31-Dec $ 6,000 Unadj Bal 2,015 Adj Bal $ Professional Library $ 30,217 Adj Bal $ 9,000 1. Wells, Capital Unadj Bal $ 64,062 Unadj Bal Adj Bal $ 30,217 Adj Bal $ 64,062 Accum. Depr. - Professional Library 1. Wells, Withdrawals Unadj Bal $ 9,066 Unadj Bal $ 40,291 31-Dec $ 7,729 Adj Bal $ 16,795 Adj Bal $ 40,291 Tuition fees earned Rent expense Unadj Bal $ 102,740 Unadj Bal $ 22,165 31-Dec $ 11,500 31-Dec $ 2,015 Adj Bal $ 114,240 Adj Bal $ 24,180 Training fees earned Teaching Supplies expense Unadj Bal $ 38,275 Unadj Bal $ 31-Dec $ 6,000 31-Dec $ 6,722 Adj Bal $ 44,275 Adj Bal $ 6,722 Depreciation expense-Professional Library Advertising expense Unadj Bal $ Unadj Bal $ 7,051 31-Dec $ 7,729 Adj Bal $ 7,051 Utilities expense Adj Bal $ 7,729 Depreciation expense-Equipment Unadj Bal $ 31-Dec $ 15,458 Unadj Bal $ 5,641 Adj Bal $ 15,458 Salaries expense Unadj Bal $ 48,350 31-Dec $ 400 Adj Bal $ 5,641 Insurance expense Unadj Bal $ 31-Dec $ 3,864 Adj Bal $ 48,750 Adj Bal $ 3,864

Adjusted TB Debit Credit 26,189 11,500 3,349 11,246 Wells Technical Institute Account Names 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 T. Wells, Withdrawals Tuition fees eanred Training fees eanred Depreciation expense- Prof Library Depreciation expense-Equipment Salaries expense Insurance expense Rent expense Teaching Supplies expense Advertising expense Utilities expense Totals 30,217 16,795 70,500 31,575 32,340 400 9,000 64,062 40,291 114,240 44,275 7,729 15,458 48,750 3,864 24,180 6,722 7,051 5,641 312,687 312,687