1. Prepare the necessary adjusting journal entries for items a through h. Assume that adjusting entries are...

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1. Prepare the necessary adjusting journalentries for items a through h. Assume thatadjusting entries are made only at year-end.
[The following information applies to the questionsdisplayed below.]

Wells Technical Institute (WTI), a school owned by Tristana Wells,provides training to individuals who pay tuition directly to theschool. WTI also offers training to groups in off-site locations.Its unadjusted trial balance as of December 31, 2017, follows. WTIinitially records prepaid expenses and unearned revenues in balancesheet accounts. Descriptions of items athrough hthat require adjusting entries on December 31, 2017, follow.

Additional Information Items
An analysis of WTI's insurance policies shows that $2,674 ofcoverage has expired.
An inventory count shows that teaching supplies costing $2,318are available at year-end 2017.
Annual depreciation on the equipment is $10,698.
Annual depreciation on the professional library is $5,349.
On November 1, WTI agreed to do a special six-month course(starting immediately) for a client. The contract calls for amonthly fee of $2,800, and the client paid the first five months'fees in advance. When the cash was received, the Unearned TrainingFees account was credited. The fee for the sixth month will berecorded when it is collected in 2018.
On October 15, WTI agreed to teach a four-month class (beginningimmediately) for an individual for $2,461 tuition per month payableat the end of the class. The class started on October 15, but nopayment has yet been received. (WTI's accruals are applied to thenearest half-month; for example, October recognizes one-half monthaccrual.)
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 foreach employee.
The balance in the Prepaid Rent account represents rent forDecember.
WELLS TECHNICAL INSTITUTE
Unadjusted Trial Balance
December 31, 2017
Debit Credit
Cash $ 27,094
Accounts receivable 0
Teaching supplies 10,420
Prepaid insurance 15,632
Prepaid rent 2,085
Professional library 31,262
Accumulateddepreciation—Professional library $ 9,380
Equipment 72,935
Accumulateddepreciation—Equipment 16,675
Accounts payable 34,976
Salaries payable 0
Unearned training fees 14,000
Common stock 14,000
Retained earnings 52,277
Dividends 41,684
Tuition fees earned 106,293
Training fees earned 39,599
Depreciationexpense—Professional library 0
Depreciationexpense—Equipment 0
Salaries expense 50,022
Insurance expense 0
Rent expense 22,935
Teaching supplies expense 0
Advertising expense 7,295
Utilities expense 5,836
Totals $ 287,200 $ 287,200
Required:

Answer & Explanation Solved by verified expert

4.5 Ratings (787 Votes)

	Wells Technical Institute
	Journal Entries
	for the period ended 31 Dec 2017
	Adjusting Entries
Date	Account Title	Dr Amount	Cr Amount
31-Dec	Inurance Exp	$2,674
	To Prepaid Exp		$2,674
	being the prepaid exp recorded

31-Dec	Teaching Supplies Exp-$10420-$2318	$8,102
	To Teaching Supplies		$8,102
	to record the supplies

31-Dec	Depreciation Exp-Equipment	$10,698
	To Accumuated Depreciation Exp-Equipment		$10,698
	to record the deprecaition exp on equipment

31-Dec	Depreciation Exp-Professional Library	$5,349
	To Accumulated Depreciation Exp-Professional Library		$5,349
	to record the depreciation for professional library

31-Dec	Unearned Training Fess-$2800*3	$8,400
	To Training Fees Earned		$8,400
	To record the unearned training fees

31-Dec	Accounts Receivable -2.5 months*$2461	$6,152.50
	To Tution Fees Earned		$6,152.50
	to record the WTI accurals

31-Dec	Salaries-$1002 days2 Employees	$400
	To Salary Payable		$400
	to record the salaries accrued

31-Dec	Rent	$2,085
	To Prepaid Rent		$2,085
	To record the prepaid rent

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Transcribed Image Text

1. Prepare the necessary adjusting journalentries for items a through h. Assume thatadjusting entries are made only at year-end.[The following information applies to the questionsdisplayed below.]Wells Technical Institute (WTI), a school owned by Tristana Wells,provides training to individuals who pay tuition directly to theschool. WTI also offers training to groups in off-site locations.Its unadjusted trial balance as of December 31, 2017, follows. WTIinitially records prepaid expenses and unearned revenues in balancesheet accounts. Descriptions of items athrough hthat require adjusting entries on December 31, 2017, follow. Additional Information ItemsAn analysis of WTI's insurance policies shows that $2,674 ofcoverage has expired.An inventory count shows that teaching supplies costing $2,318are available at year-end 2017.Annual depreciation on the equipment is $10,698.Annual depreciation on the professional library is $5,349.On November 1, WTI agreed to do a special six-month course(starting immediately) for a client. The contract calls for amonthly fee of $2,800, and the client paid the first five months'fees in advance. When the cash was received, the Unearned TrainingFees account was credited. The fee for the sixth month will berecorded when it is collected in 2018.On October 15, WTI agreed to teach a four-month class (beginningimmediately) for an individual for $2,461 tuition per month payableat the end of the class. The class started on October 15, but nopayment has yet been received. (WTI's accruals are applied to thenearest half-month; for example, October recognizes one-half monthaccrual.)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 foreach employee.The balance in the Prepaid Rent account represents rent forDecember.WELLS TECHNICAL INSTITUTEUnadjusted Trial BalanceDecember 31, 2017DebitCreditCash$27,094Accounts receivable0Teaching supplies10,420Prepaid insurance15,632Prepaid rent2,085Professional library31,262Accumulateddepreciation—Professional library$9,380Equipment72,935Accumulateddepreciation—Equipment16,675Accounts payable34,976Salaries payable0Unearned training fees14,000Common stock14,000Retained earnings52,277Dividends41,684Tuition fees earned106,293Training fees earned39,599Depreciationexpense—Professional library0Depreciationexpense—Equipment0Salaries expense50,022Insurance expense0Rent expense22,935Teaching supplies expense0Advertising expense7,295Utilities expense5,836Totals$287,200$287,200Required:

WELLS TECHNICAL INSTITUTE Unadjusted Trial Balance December 31, 2017
	Debit		Credit
Cash	$	27,094
Accounts receivable		0
Teaching supplies		10,420
Prepaid insurance		15,632
Prepaid rent		2,085
Professional library		31,262
Accumulateddepreciation—Professional library			$	9,380
Equipment		72,935
Accumulateddepreciation—Equipment				16,675
Accounts payable				34,976
Salaries payable				0
Unearned training fees				14,000
Common stock				14,000
Retained earnings				52,277
Dividends		41,684
Tuition fees earned				106,293
Training fees earned				39,599
Depreciationexpense—Professional library		0
Depreciationexpense—Equipment		0
Salaries expense		50,022
Insurance expense		0
Rent expense		22,935
Teaching supplies expense		0
Advertising expense		7,295
Utilities expense		5,836
Totals	$	287,200	$	287,200