29 Jun Question Wells Technical Institute
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. Its unadjusted trial balance as of December 31, 2013, follows. WTI initially records prepaid expenses and unearned revenues in balance sheet accounts. Descriptions of itemsathroughh that require adjusting entries on December 31, 2013, follow.
Additional Information Items
a.
An analysis of WTI’s insurance policies shows that $3,350 of coverage has expired.
b.
An inventory count shows that teaching supplies costing $3,750 are available at year-end 2013.
c.
Annual depreciation on the equipment is $15,100.
d.
Annual depreciation on the professional library is $9,100.
e.
On November 1, WTI agreed to do a special six-month course (starting immediately) for a client. The contract calls for a monthly fee of $4,400, and the client paid the first five months’ fees in advance. When the cash was received, the Unearned Training Fees account was credited. The fee for the sixth month will be recorded when it is collected in 2014.
f.
On October 15, WTI agreed to teach a four-month class (beginning immediately) for an individual for $4,900 tuition per month payable at the end of the class. The class started on October 15, but no payment has yet been received. (WTI’s accruals are applied to the nearest half-month; for example, October recognizes one-half month accrual.)
g.
WTI’s two employees are paid weekly. As of the end of the year, two days’ salaries have accrued at the rate of $290 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, 2013
Debit
Credit
Cash
$
53,000
Accounts receivable
0
Teaching supplies
9,900
Prepaid insurance
13,900
Prepaid rent
4,900
Professional library
54,000
Accumulated depreciation—Professional library
$
11,900
Equipment
99,000
Accumulated depreciation—Equipment
16,900
Accounts payable
46,900
Salaries payable
0
Unearned training fees
22,000
Common stock
29,000
Retained earnings
99,000
Dividends
69,000
Tuition fees earned
146,700
Training fees earned
59,000
Depreciation expense—Professional library
0
Depreciation expense—Equipment
0
Salaries expense
69,000
Insurance expense
0
Rent expense
42,500
Teaching supplies expense
0
Advertising expense
7,900
Utilities expense
8,300
Totals
$
431,400
$
431,400
2.
value:
10.00 points
2.
Prepare the necessary adjusting journal entries for items a through h
Post the entries in T- Accounts
Prepare Adjusted Trial Balance
Prepare Income Statement, Statement of retained earnings, Balance Sheet
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