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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. 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 $2,939 of coverage has expired.
  2. An inventory count shows that teaching supplies costing $2,547 are available at year-end.
  3. Annual depreciation on the equipment is $11,756.
  4. Annual depreciation on the professional library is $5,878.
  5. On September 1, WTI agreed to do five courses for a client for $2,800 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 $14,000 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, $7,450 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  Credit

Cash $26,944  

Accounts receivable  0   

Teaching supplies  10,362   

Prepaid insurance  15,545  

 Prepaid rent  2,073   

Professional library  31,088   

Accumulated depreciation—Professional library    $9,328

Equipment  97,000   

Accumulated depreciation—Equipment     16,582

Accounts payable      25,000

Salaries payable     0

Unearned training fees     14,000

Common stock     16,077

Retained earnings      84,000

Dividends  41,452   

Tuition fees earned     105,701

Training fees earned    39,379

Depreciation expense—Professional library  0  

 Depreciation expense—Equipment  0   

Salaries expense  49,743  

 Insurance expense  0   

Rent expense  22,803   

Teaching supplies expense  0   

Advertising expense  7,254   

Utilities expense  5,803   


Totals $310,067  $310,067

Required:

1. make the necessary adjusting journal entries for items a through h. Assume that adjusting entries are made only at year-end. 

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