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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 $2,674 of coverage has expired.
  2. An inventory count shows that teaching supplies costing $2,318 are available at year-end.
  3. Annual depreciation on the equipment is $10,698.
  4. Annual depreciation on the professional library is $5,349.
  5. On September 1, WTI agreed to do five courses for a client for $2,400 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 $12,000 cash in advance for all five courses on September 1, and WTI credited Unearned Training Fees.
  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, $7,153 of the tuition 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.
  9.  

WELLS TECHNICAL INSTITUTE

Unadjusted Trial Balance

December 31 Debit CreditCash$26,340   Accounts receivable 0   Teaching supplies 10,129   Prepaid insurance 15,197   Prepaid rent 2,027   Professional library 30,391   Accumulated depreciation—Professional library   $9,119Equipment 99,000   Accumulated depreciation—Equipment    16,210Accounts payable     24,000Salaries payable    0Unearned training fees    12,000Common stock    23,140Retained earnings    81,000Dividends 40,523   Tuition fees earned    103,332Training fees earned    38,496Depreciation expense—Professional library 0   Depreciation expense—Equipment 0   Salaries expense 48,628   Insurance expense 0   Rent expense 22,297   Teaching supplies expense 0   Advertising expense 7,092   Utilities expense 5,673   Totals$307,297 $307,297

2-a. Post the balance from the unadjusted trial balance and the adjusting entries in to the T-accounts.

2-b. Prepare an adjusted trial balance.

  

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