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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
- An analysis of WTI's insurance policies shows that $2,674 of coverage has expired.
- An inventory count shows that teaching supplies costing $2,318 are available at year-end.
- Annual depreciation on the equipment is $10,698.
- Annual depreciation on the professional library is $5,349.
- 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.
- 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.
- 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.
- The balance in the Prepaid Rent account represents rent for December.
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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