Question

Prepare an adjusted trial balance

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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 $2,542 of coverage has expired.
2. An inventory count shows that teaching supplies costing $2,204 are available at year-end.
3. Annual depreciation on the equipment is $10,170.
4. Annual depreciation on the professional library is $5,085.
5. On September 1, WTI agreed to do five courses for a client for $2,300 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 $11,500 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, $6,748 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	$	26,642
   Accounts receivable		0
   Teaching supplies		10,245
   Prepaid insurance		15,371
   Prepaid rent		2,050
   Professional library		30,739
   Accumulated depreciation—Professional library				$	9,223
   Equipment		98,000
   Accumulated depreciation—Equipment					16,396
   Accounts payable					26,000
   Salaries payable					0
   Unearned training fees					11,500
   Common stock					24,110
   Retained earnings					78,000
   Dividends		40,988
   Tuition fees earned					104,516
   Training fees earned					38,937
   Depreciation expense—Professional library		0
   Depreciation expense—Equipment		0
   Salaries expense		49,186
   Insurance expense		0
   Rent expense		22,550
   Teaching supplies expense		0
   Advertising expense		7,173
   Utilities expense		5,738
   Totals	$	308,682		$	308,682

Answer 1

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Wells Technical Institute
Adjusting Entries
Account	Debit $	Credit $
Insurance Expense	2,542.00
Prepaid Insurance		2,542.00
Supplies Expense	8,041.00
Teaching Supplies		8,041.00
Depreciation- Professional Library	5,085.00
Accumulated Depreciation- Professional Library		5,085.00
Depreciation- Equipment	10,710.00
Accumulated Depreciation- Equipment		10,710.00
Unearned Training Fees	4,600.00
Training Fees earned		4,600.00
Accounts Receivable	6,748.00
Tuition Fees Earned		6,748.00
Salaries Expense	400.00
Salaries Payable		400.00
Rent Expense	2,050.00
Prepaid Rent		2,050.00

Adjusted Trial Balance	Unadjusted	Adjustments	Adjusted
Account Titles	Debit	Credit	Debit	Credit	Debit	Credit
Cash	26,642.00				26,642.00
Accounts Receivable			6,748.00		6,748.00
Teaching Supplies	10,245.00			8,041.00	2,204.00
Prepaid Insurance	15,371.00			2,542.00	12,829.00
Prepaid Rent	2,050.00			2,050.00	-
Professional Library	30,739.00				30,739.00
Accumulated Depreciation- Professional Library		9,223.00		5,085.00		14,308.00
Equipment	98,000.00				98,000.00
Accumulated Depreciation- Equipment		16,396.00		10,710.00		27,106.00
Accounts Payable		26,000.00				26,000.00
Salaries Payable				400.00		400.00
Unearned Training Fees		11,500.00	4,600.00			6,900.00
Common Stock		24,110.00				24,110.00
Retained Earnings		78,000.00				78,000.00
Dividends	40,988.00				40,988.00
Tuition Fees Earned		104,516.00		6,748.00		111,264.00
Training Fees Earned		38,937.00		4,600.00		43,537.00
Depreciation- Professional Library			5,085.00		5,085.00
Depreciation- Equipment			10,710.00		10,710.00
Salaries Expense	49,186.00		400.00		49,586.00
Insurance Expense			2,542.00		2,542.00
Rent Expense	22,550.00		2,050.00		24,600.00
Teaching Supplies Expense			8,041.00		8,041.00
Advertising Expense	7,173.00				7,173.00
Utilities Expense	5,738.00				5,738.00
Total	308,682.00	308,682.00	40,176.00	40,176.00	331,625.00	331,625.00