Score: 100/100 Points 100 %

[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 $3,732 of coverage has expired.
b. An inventory count shows that teaching supplies costing $3,235 are available at year-end.
c. Annual depreciation on the equipment is $14,929.
d. Annual depreciation on the professional library is $7,464.
e. On September 1, WTI agreed to do five courses for a client for $2,900 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 $14,500 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, $11,100 of the tuition has been earned by WTI.
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.
 
WELLS TECHNICAL INSTITUTE
Unadjusted Trial Balance
December 31
  Debit   Credit
Cash $ 26,793      
Accounts receivable   0      
Teaching supplies   10,304      
Prepaid insurance   15,458      
Prepaid rent   2,062      
Professional library   30,913      
Accumulated depreciation—Professional library      $ 9,275
Equipment   72,119      
Accumulated depreciation—Equipment         16,489
Accounts payable          33,931
Salaries payable         0
Unearned training fees         14,500
T. Wells, Capital         65,539
T. Wells, Withdrawals   41,220      
Tuition fees earned         105,108
Training fees earned         39,158
Depreciation expense—Professional library   0      
Depreciation expense—Equipment   0      
Salaries expense   49,464      
Insurance expense   0      
Rent expense   22,682      
Teaching supplies expense   0      
Advertising expense   7,214      
Utilities expense   5,771      
Totals $ 284,000   $284,000
  
3. Award: 30 out of 30.00 points  

Required:
1. Prepare the necessary adjusting journal entries for items a through h. Assume that adjusting entries are made only at year-end.
No Transaction General Journal Debit Credit
1 a. Insurance expense  3,732 

Prepaid insurance  3,732 

2 b. Teaching supplies expense  7,069 

Teaching supplies  7,069 

3 c. Depreciation expense—Equipment  14,929 

Accumulated depreciation—Equipment  14,929 

4 d. Depreciation expense—Professional library  7,464 

Accumulated depreciation—Professional library  7,464 

5 e. Unearned training fees  5,800 

Training fees earned  5,800 

6 f. Accounts receivable  11,100 

Tuition fees earned  11,100 

7 g. Salaries expense  400 

Salaries payable  400 

8 h. Rent expense  2,062 

Prepaid rent  2,062 

 

References

Worksheet Learning Objective: 03-P2 Learning Objective: 03-P6 Prepare financial statements
Prepare adjusting entries for from an adjusted trial balance.
deferral of revenues.

Difficulty: 3 Hard Learning Objective: 03-P3

Prepare adjusting entries for
accrued expenses.

Learning Objective: Learning Objective: 03-P4

03-P1 Prepare Prepare adjusting entries for
adjusting entries for accrued revenues.
deferral of expenses.

Required:
1. Prepare the necessary adjusting journal entries for items a through h. Assume that adjusting entries are made only at year-end.
No Transaction General Journal Debit Credit
1 a. Insurance expense 3,732
Prepaid insurance 3,732

2 b. Teaching supplies expense 7,069

Teaching supplies 7,069

3 c. Depreciation expense—Equipment 14,929

Accumulated depreciation—Equipment 14,929

4 d. Depreciation expense—Professional library 7,464

Accumulated depreciation—Professional library 7,464

5 e. Unearned training fees 5,800

Training fees earned 5,800

6 f. Accounts receivable 11,100

Tuition fees earned 11,100

7 g. Salaries expense 400

Salaries payable 400

8 h. Rent expense 2,062

Prepaid rent 2,062
 
Explanation:

1.
Adjustment b:
To record supplies used ($10,304 – $3,235) = $7,069

Adjustment g:
To record accrued salaries (2 days × $100 × 2) = $400