Question

Sanchez Technical Institute (STI), a school owned by Carlos Sanchez, provides training to individuals who pay tuition directly to the school. STI also offers training to groups in off-site locations. Its unadjusted trial balance as of December 31, 2018, is found on the trial balance tab. STI initially records prepaid expenses and unearned revenues in balance sheet accounts. Descriptions of items a through h that require adjusting entries on December 31 follow.

1. An analysis of STI’s insurance policies shows that $2,700 of coverage has expired.
2. An inventory count shows that teaching supplies costing $3,480 are available at year-end.
3. Annual depreciation on the equipment is $5,000.
4. Annual depreciation on the professional library is $9,400.
5. On November 1, STI agreed to do a special six-month course (starting immediately) for a client. The contract calls for a monthly fee of $2,800, and the client paid the first five months’ fees in advance. When the cash was received, the Unearned Training Fees account was credited.
6. On October 15, STI agreed to teach a four-month class (beginning immediately) for an executive with payment due at the end of the class. At December 31, $9,000 of the tuition has been earned by STI.
7. STI’s two employees are paid weekly. As of the end of the year, two days’ salaries have accrued at the rate of $240 per day for each employee.
8. The balance in the Prepaid Rent account represents rent for December.
   Prepare journal entries to record the following transactions for Allied assuming it uses a perpetual inventory system and the gross method.
   

Prepare journal entries to record the following transactions for Allied assuming it uses a perpetual inventory system and the gross method.

Answer 1

Since unadjusted trial balance was not given, amount for teaching supplies expense and rent expense could not be caluclated. It is calculated as follows

Teaching Supplies expense = Teaching Supplies (Unadjusted balance) - $3480
Rent Expense = Prepaid Rent (Unadjusted Balance)

	Account Titles	Debit	Credit
a	Insurance Expense	$              2,700
	Prepaid Insurance		$            2,700
b	Teaching Supplies Expense
	Teaching Supplies
c	Depreciation Expense-Equipment	$              5,000
	Accumulated Depreciation-Equipment		$            5,000
d	Depreciation Expense-Professional Library	$              9,400
	Accumulated Depreciation-Professional Library		$            9,400
e	Unearned Training Fee	$              5,600
	Training fees earned		$            5,600
f	Accounts Receivable	$              9,000
	Tuition fees earned		$            9,000
g	Salaries Expense	$                 960
	Salaries Payable		$               960
h	Rent Expense
	Prepaid Rent