Question

In: Accounting

Wells Technical Institute (WTI), a school owned by Tristana Wells, provides training to individuals who pay...

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.

Cash Equipment
Unadj. Bal. 27,396selected answer correct not attempted Unadj. Bal. 73,751selected answer correct not attempted
not attempted not attempted not attempted not attempted not attempted not attempted not attempted not attempted
not attempted not attempted not attempted not attempted not attempted not attempted not attempted not attempted
Adj. Bal. 27,396 Adj. Bal. 73,751
Accounts Receivable Accumulated Depreciation—Equipment
Unadj. Bal. 0selected answer correct not attempted Unadj. Bal. not attempted 16,861selected answer correct
fselected answer correct not attempted not attempted not attempted not attempted not attempted not attempted not attempted
not attempted not attempted not attempted not attempted not attempted not attempted not attempted not attempted
Adj. Bal. 0 Adj. Bal. 16,861
Teaching Supplies Accounts Payable
Unadj. Bal. not attempted not attempted Unadj. Bal. not attempted not attempted
not attempted not attempted not attempted not attempted not attempted not attempted not attempted not attempted
not attempted not attempted not attempted not attempted not attempted not attempted not attempted not attempted
Adj. Bal. 0 Adj. Bal. 0
Prepaid Insurance Salaries Payable
Unadj. Bal. not attempted not attempted Unadj. Bal. not attempted not attempted
not attempted not attempted not attempted not attempted not attempted not attempted not attempted not attempted
not attempted not attempted not attempted not attempted not attempted not attempted not attempted not attempted
Adj. Bal. 0 Adj. Bal. 0
Prepaid Rent Unearned Training Fees
Unadj. Bal. not attempted not attempted Unadj. Bal. not attempted not attempted
not attempted not attempted not attempted not attempted not attempted not attempted not attempted not attempted
not attempted not attempted not attempted not attempted not attempted not attempted not attempted not attempted
Adj. Bal. 0 Adj. Bal. 0
Professional Library Common stock
Unadj. Bal. not attempted not attempted Unadj. Bal. not attempted not attempted
not attempted not attempted not attempted not attempted not attempted not attempted not attempted not attempted
not attempted not attempted not attempted not attempted not attempted not attempted not attempted not attempted
Adj. Bal. 0 Adj. Bal. 0
Accumulated Depreciation—Professional Library Retained earnings
Unadj. Bal. not attempted not attempted Unadj. Bal. not attempted
not attempted not attempted not attempted not attempted not attempted not attempted not attempted not attempted
not attempted not attempted not attempted not attempted not attempted not attempted not attempted not attempted
Adj. Bal. 0 Adj. Bal. 0
Tuition Fees Earned Dividends
Unadj. Bal. not attempted not attempted Unadj. Bal. not attempted not attempted
not attempted not attempted not attempted not attempted not attempted not attempted not attempted not attempted
not attempted not attempted not attempted not attempted not attempted not attempted not attempted not attempted
Adj. Bal. 0 Adj. Bal. 0
Training Fees Earned Rent Expense
Unadj. Bal. not attempted not attempted Unadj. Bal. not attempted not attempted
not attempted not attempted not attempted not attempted not attempted not attempted not attempted not attempted
not attempted not attempted not attempted not attempted not attempted not attempted not attempted not attempted
Adj. Bal. 0 Adj. Bal. 0
Depreciation Expense—Professional Library Teaching Supplies Expense
Unadj. Bal. not attempted not attempted Unadj. Bal. not attempted not attempted
not attempted not attempted not attempted not attempted not attempted not attempted not attempted not attempted
not attempted not attempted not attempted not attempted not attempted not attempted not attempted not attempted
Adj. Bal. 0 Adj. Bal. 0
Depreciation Expense—Equipment Advertising Expense
Unadj. Bal. not attempted not attempted Unadj. Bal. not attempted not attempted
not attempted not attempted not attempted not attempted not attempted not attempted not attempted not attempted
not attempted not attempted not attempted not attempted not attempted not attempted not attempted not attempted
Adj. Bal. 0 Adj. Bal. 0
Salaries Expense Utilities Expense
Unadj. Bal. not attempted not attempted Unadj. Bal. not attempted not attempted
not attempted not attempted not attempted not attempted not attempted not attempted not attempted not attempted
not attempted not attempted not attempted not attempted not attempted not attempted not attempted not attempted
Adj. Bal. 0 Adj. Bal. 0
Insurance Expense
Unadj. Bal. not attempted not attempted
not attempted not attempted not attempted not attempted
not attempted not attempted not attempted not attempted
Adj. Bal. 0

3-a. Prepare Wells Technical Institute's income statement for the year 2017.
3-b. Prepare Wells Technical Institute's statement of owner's equity for the year 2017.
3-c. Prepare Wells Technical Institute's balance sheet as of December 31, 2017.

Solutions

Expert Solution

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

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