In: Accounting
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. Its unadjusted trial balance as of December 31, 2017, follows. WTI initially records prepaid expenses and unearned revenues in balance sheet accounts. Descriptions of items a through h that require adjusting entries on December 31, 2017, follow
Prepare the necessary adjusting journal entries for items
a through h. Assume that adjusting entries are
made only at year-end.
Answer is complete and correct.
No | Transaction | General Journal | Debit | Credit |
---|---|---|---|---|
1 | a. | Insurance expenseselected answer correct | 3,335selected answer correct | not attempted |
Prepaid insuranceselected answer correct | not attempted | 3,335selected answer correct | ||
2 | b. | Teaching supplies expenseselected answer correct | 7,645selected answer correct | not attempted |
Teaching suppliesselected answer correct | not attempted | 7,645selected answer correct | ||
3 | c. | Depreciation expense—Equipmentselected answer correct | 13,342selected answer correct | not attempted |
Accumulated depreciation—Equipmentselected answer correct | not attempted | 13,342selected answer correct | ||
4 | d. | Depreciation expense—Professional libraryselected answer correct | 6,671selected answer correct | not attempted |
Accumulated depreciation—Professional libraryselected answer correct | not attempted | 6,671selected answer correct | ||
5 | e. | Unearned training feesselected answer correct | 5,000selected answer correct | not attempted |
Training fees earnedselected answer correct | not attempted | 5,000selected answer correct | ||
6 | f. | Accounts receivableselected answer correct | 10,153selected answer correct | not attempted |
Tuition fees earnedselected answer correct | not attempted | 10,153selected answer correct | ||
7 | g. | Salaries expenseselected answer correct | 400selected answer correct | not attempted |
Salaries payableselected answer correct | not attempted | 400selected answer correct | ||
8 | h. | Rent expenseselected answer correct | 2,108selected answer correct | not attempted |
Prepaid rentselected answer correct | not attempted | 2,108selected answer correct |
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.
Post the balance from the unadjusted trial balance and the adjusting entries in to the T-accounts.
|
1. T-accounts
Cash | Accounts Receivable | Teaching supplies | |||||||||||
Event | Debit | Credit | Event | Event | Debit | Credit | Event | Event | Debit | Credit | Event | ||
Beg.Bal | 34000 | Beg.Bal | 0 | Beg.Bal | 8000 | 5200 | b | ||||||
f | 7500 | ||||||||||||
End.Bal | 34000 | End Bal | 7500 | 8000 | 5200 | ||||||||
End.Bal. | 2800 | ||||||||||||
Prepaid Insurance | Prepaid Rent | Professional lbrary | |||||||||||
Event | Debit | Credit | Event | Event | Debit | Credit | Event | Event | Debit | Credit | Event | ||
Beg.Bal | 12000 | 2400 | a | Beg.Bal | 3000 | Beg.Bal | 35000 | ||||||
3000 | h | ||||||||||||
12000 | 2400 | 3000 | 3000 | End.Bal. | 35000 | ||||||||
End.Bal. | 9600 | End.Bal. | 0 | ||||||||||
Accumulated depreciation - Profess. Liabrary | Equipment | Accumualted Depreciation - Equipment | |||||||||||
Event | Debit | Credit | Event | Event | Debit | Credit | Event | Event | Debit | Credit | Event | ||
Beg.Bal | 10000 | Beg.Bal | 80000 | Beg.Bal | 15000 | ||||||||
7200 | d | 13200 | c | ||||||||||
80000 | |||||||||||||
17200 | 28200 | ||||||||||||
End.Bal. | 17200 | End.Bal. | 80000 | End.Bal. | 28200 | ||||||||
Accounts payable | Salaries payable | Unearned training fee | |||||||||||
Event | Debit | Credit | Event | Event | Debit | Credit | Event | Event | Debit | Credit | Event | ||
Beg.Bal | 26000 | Beg.Bal | 0 | Beg.Bal | 12500 | ||||||||
400 | g | e | 5000 | ||||||||||
End Bal | 26000 | End Bal | 400 | 5000 | 12500 | ||||||||
End Bal | 7500 | ||||||||||||
T.Wells - capital | Tution fee earned | Training fee earned | |||||||||||
Event | Debit | Credit | Event | Event | Debit | Credit | Event | Event | Debit | Credit | Event | ||
Beg.Bal | 90000 | Beg.Bal | 123900 | Beg.Bal | 40000 | ||||||||
7500 | f | 5000 | e | ||||||||||
45000 | |||||||||||||
End Bal | 90000 | End Bal | 131400 | ||||||||||
End Bal | 45000 | ||||||||||||
Depreciation expense - Professional Library | Depreciation expense - Equipment | Salaries expense | |||||||||||
Event | Debit | Credit | Event | Event | Debit | Credit | Event | Event | Debit | Credit | Event | ||
Beg.Bal | 0 | Beg.Bal | 0 | Beg.Bal | 50000 | ||||||||
d | 7200 | c | 13200 | g | 400 | ||||||||
7200 | 13200 | 50400 | |||||||||||
End Bal | 7200 | 0 | End Bal | 13200 | 0 | End Bal | 50400 | ||||||
Insurance expense | Rent expense | Teaching supplies expense | |||||||||||
Event | Debit | Credit | Event | Event | Debit | Credit | Event | Event | Debit | Credit | Event | ||
Beg.Bal | 0 | Beg.Bal | 33000 | Beg.Bal | 0 | ||||||||
a | 2400 | h | 3000 | b | 5200 | ||||||||
2400 | 36000 | 5200 | |||||||||||
End Bal | 2400 | End Bal | 36000 | End Bal | 5200 | 0 | |||||||
Advettising expense | Utilities expense | t. Wells - Withdrawals | |||||||||||
Event | Debit | Credit | Event | Event | Debit | Credit | Event | Event | Debit | Credit | Event | ||
Beg.Bal | 6000 | Beg.Bal | 6400 | Beg.Bal | 0 | 50000 | |||||||
6000 | 6400 | 0 | 50000 | ||||||||||
End Bal | 6000 | End Bal | 6400 | End Bal | 50000 |
2.Adjustment Journal entries
WELLS TECHNICAL INSTITUTE | |||
Adjustment journal entries for the year ending December31, 2017 | |||
Event | Account & Description | Debit | Credit |
a | Insurance expense | 2400 | |
Prepaid insurance | 2400 | ||
(Expired insurance recorded) | |||
b | Teaching supplies expense | 5200 | |
Teaching supplies | 5200 | ||
(Teaching supplies expense recorded) | |||
c | Depreciation expense - Equipment | 13200 | |
Accumulated depreciation - equipment | 13200 | ||
(Depreciation expense on equipment | |||
for the year recorded) | |||
d | Depreciation expense - professional library | 7200 | |
Accumulated depreciation - professional library | 7200 | ||
(Depreciation expense on professional library | |||
for the year recorded) | |||
e | Unearned training fee | 5000 | |
Trainingfee earned | 5000 | ||
(Training fee received for November & december ) | |||
f | Accounts receivable | 7500 | |
Tution fee earned | 7500 | ||
(Tution fee from October 15th to December 31st ) | |||
g | Salaries expense | 400 | |
Salaries payable | 400 | ||
(Salary of two employees for two days @100 per day) | |||
h | Rent expense | 3000 | |
Prepaid Rent | 3000 | ||
(Rent for December accounted) |
3. Adjusted trial balance
WELLS TECHNICAL INSTITUTE | |||
Adjusted Trial balance as at December 31 , 2017 | |||
Account | Debit | Credit | |
Cash | 34000 | ||
Accounts Receivable | 7500 | ||
Teaching supplies | 2800 | ||
Prepaid insurance | 9600 | ||
Preofessional Library | 35000 | ||
Accumulated Depreciation - Professional Library | 17200 | ||
Equipment | 80000 | ||
Accumulated Depreciation - Equipment | 28200 | ||
Accounts Payable | 26000 | ||
Salaries Payable | 400 | ||
Unearned Training Fee | 7500 | ||
T.Wells - Capital | 90000 | ||
T.Wells - Withdrawals | 50000 | ||
Tution fee earned | 131400 | ||
Training Fee earned | 45000 | ||
Depreciation expense - Professional library | 7200 | ||
Depreciation expense - Equipment | 13200 | ||
Salaries expense | 50400 | ||
Insurance Expense | 2400 | ||
Rent Expense | 36000 | ||
Teaching Supplies expense | 5200 | ||
Advertisinf Expense | 6000 | ||
Utilities expense | 6400 | ||
T O T A L | 345700 | 345700 |
4. Income Statement and Statement of owners' equity
WELLS TECHNICAL INSTITUTE | |||
Income statement for the year ended December 31, 2017 | |||
$ | $ | ||
Revenue | |||
Tutuion fee earned | 131400 | ||
Training fee earned | 45000 | ||
176400 | |||
Less: Expenses | |||
Salaries expense | 50400 | ||
Rent Expense | 36000 | ||
Depreciation expense - equipment | 13200 | ||
Depreciation expense - Professional library | 7200 | ||
Advertising expense | 6000 | ||
Utilities expense | 6400 | ||
Teaching Supplies expense | 5200 | ||
Insurance epxense | 2400 | ||
Total Expenses | 126800 | ||
Net Income | 49600 | ||
WELLS TECHNICAL INSTITUTE | |||
Statement owners' equity as on December 31, 2017 | |||
Beginning Owner's equity | 90000 | ||
Less: Drawings | 50000 | ||
40000 | |||
Add: Net income for the year | 49600 | ||
Ending owner's equity | 89600 |
Balance sheet
WELLS TECHNICAL INSTITUTE | |||
Balance sheet as at December 31, 2017 | |||
Assets: | $ | $ | |
Cash | 34000 | ||
Accounts Receivable | 7500 | ||
Teaching Supplies | 2800 | ||
Prepaid insurance | 9600 | ||
Professional Library | 35000 | ||
Accumulated Depreciation - Professional Library | -17200 | 17800 | |
Equipment | 80000 | ||
Accumulated Depreciation - Equipment | -28200 | 51800 | |
Total Assets | 123500 | ||
Liabilities & Owners' Equity | |||
Accounts Payable | 26000 | ||
Salaries Payable | 400 | ||
Unearned Training Fee | 7500 | ||
Owners' Equity | 89600 | ||
Total Liabilities & owner's equity | 123500 |