Question

The following information applies to the questions below.
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 $3,864 of coverage has expired.
2. An inventory count shows that teaching supplies costing $3,349 are available at year-end.
3. Annual depreciation on the equipment is $15,458.
4. Annual depreciation on the professional library is $7,729.
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, $12,000 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.
WELLS TECHNICAL INSTITUTE
Unadjusted Trial Balance
December 31
Debit Credit
Cash $ 27,849
Accounts receivable 0
Teaching supplies 10,710
Prepaid insurance 16,068
Prepaid rent 2,143
Professional library 32,133
Accumulated depreciation—Professional library $ 9,641
Equipment 74,968
Accumulated depreciation—Equipment 17,139
Accounts payable 36,341
Salaries payable 0
Unearned training fees 14,000
T. Wells, Capital 68,123
T. Wells, Withdrawals 42,845
Tuition fees earned 109,254
Training fees earned 40,702
Depreciation expense—Professional library 0
Depreciation expense—Equipment 0
Salaries expense 51,415
Insurance expense 0
Rent expense 23,573
Teaching supplies expense 0
Advertising expense 7,498
Utilities expense 5,998
Totals $ 295,200 $295,200
a. Post the balance from the unadjusted trial balance and the adjusting entries in to the T-accounts.
b. Prepare an adjusted trial balance.

Answer 1

Answer:

1. T-accounts:

Cash

Account Titles                        Debit           Credit

Unadjusted Trial Balance     $ 27,849

Accounts receivable

Account Titles                        Debit           Credit

Unadjusted Trial Balance     $ 0

Training fees earned            12,000

Teaching supplies

Account Titles                        Debit           Credit

Unadjusted Trial Balance     $10,710

Supplies Expense                                      $7,361

Balance                                                        3,349

Totals                                   $10,710        $10,710

Prepaid insurance

Account Titles                        Debit           Credit

Unadjusted Trial Balance     $16,068

Insurance Expense                                  $3,864

Balance                                                     12,204

Totals                                   $16,068     $16,068

Prepaid rent

Account Titles                        Debit           Credit

Unadjusted Trial Balance     $2,143

Rent expense                                          $2,143

Professional library

Account Titles                        Debit           Credit

Unadjusted Trial Balance     $32,133

Accumulated depreciation—Professional library

Account Titles                        Debit           Credit

Unadjusted Trial Balance                           $ 9,641

Depreciation expense                                   7,729

Balance                                $17,370

Totals                                   $17,370         $17,270

Equipment

Account Titles                        Debit           Credit

Unadjusted Trial Balance     $74,968

Accumulated depreciation—Equipment

Account Titles                        Debit           Credit

Unadjusted Trial Balance                           $17,139

Depreciation expense                                 15,458

Balance                              $32,597

Totals                                 $32,597        $32,597

Accounts payable

Account Titles                        Debit           Credit

Unadjusted Trial Balance                          $36,341

Salaries payable

Account Titles                        Debit           Credit

Unadjusted Trial Balance                             $0

Salaries expense                                           400

Unearned training fees

Account Titles                        Debit           Credit

Unadjusted Trial Balance                          $14,000

Training Fees Revenue       $5,600

Balance                                   8,400

T. Wells, Capital

Account Titles                        Debit           Credit

Unadjusted Trial Balance                         $68,123

T. Wells, Withdrawals

Account Titles                        Debit           Credit

Unadjusted Trial Balance     $42,845

Tuition fees earned

Account Titles                        Debit           Credit

Unadjusted Trial Balance                         $109,254

Training fees earned

Account Titles                        Debit           Credit

Unadjusted Trial Balance                         $40,702

Unearned Training fee                                 5,600

Accounts receivable                                   12,000

Balance                                $58,302

Depreciation expense—Professional library

Account Titles                        Debit           Credit

Unadjusted Trial Balance     $ 0

Accumulated depreciation   7,729

Depreciation expense—Equipment

Account Titles                        Debit           Credit

Unadjusted Trial Balance     $ 0

Accumulated depreciation  15,458

Salaries expense

Account Titles                        Debit           Credit

Unadjusted Trial Balance     $51,415

Salaries payable                         400

Balance                                                     $51,815

Insurance expense

Account Titles                        Debit           Credit

Unadjusted Trial Balance     $0

Prepaid Insurance                   3,864

Rent expense

Account Titles                        Debit           Credit

Unadjusted Trial Balance     $23,573

Prepaid rent                               2,143

Balance                                                      $25,716

Teaching supplies expense

Account Titles                        Debit           Credit

Unadjusted Trial Balance     $0

Teaching supplies               $7,361

Advertising expense

Account Titles                        Debit           Credit

Unadjusted Trial Balance     $7,498

Utilities expense

Account Titles                        Debit           Credit

Unadjusted Trial Balance     $5,998

b. WELLS TECHNICAL INSTITUTE

Adjusted Trial Balance

December 31

Account Titles                             Debit            Credit

Cash                                          $ 27,849

Accounts receivable                    12,000

Teaching supplies                         3,349

Prepaid insurance                       12,204

Professional library                     32,133

Accumulated depreciation—Professional library $17,370

Equipment                                 74,968

Accumulated depreciation—Equipment               32,597

Accounts payable                                                   36,341

Salaries payable                                                          400

Unearned training fees                                           8,400

T. Wells, Capital                                                      68,123

T. Wells, Withdrawals               42,845

Tuition fees earned                                            109,254

Training fees earned                                           58,302

Depreciation expense—

Professional library                  7,729

Depreciation expense—

Equipment                             15,458

Salaries expense                    51,815

Insurance expense                 3,864

Rent expense                        25,716

Teaching supplies expense  7,361

Advertising expense             7,498

Utilities expense                   5,998

Totals                             $330,787                 $330,787

Explanation:

a) WELLS TECHNICAL INSTITUTE

Unadjusted Trial Balance

December 31

                                                        Debit               Credit

Cash                                               $ 27,849

Accounts receivable                                  0

Teaching supplies                             10,710

Prepaid insurance                            16,068

Prepaid rent                                        2,143

Professional library                          32,133

Accumulated depreciation—Professional library   $ 9,641

Equipment                                      74,968

Accumulated depreciation—Equipment                  17,139

Accounts payable                                                    36,341

Salaries payable                                                               0

Unearned training fees                                          14,000

T. Wells, Capital                                                      68,123

T. Wells, Withdrawals                    42,845

Tuition fees earned                                             109,254

Training fees earned                                            40,702

Depreciation expense—Professional library 0

Depreciation expense—Equipment 0

Salaries expense                          51,415

Insurance expense                              0

Rent expense                             23,573

Teaching supplies expense               0

Advertising expense                   7,498

Utilities expense                         5,998

Totals                                  $ 295,200           $295,200