Question

Problem 3-3A Preparing adjusting entries, adjusted trial balance, and financial statements LO A1, P1, P2, P3

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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. 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 athrough h that require adjusting entries on December 31, 2017, follow.
  
Additional Information Items

An analysis of WTI's insurance policies shows that $4,129 of coverage has expired.

An inventory count shows that teaching supplies costing $3,578 are available at year-end 2017.

Annual depreciation on the equipment is $16,515.

Annual depreciation on the professional library is $8,258.

On November 1, WTI agreed to do a special six-month course (starting immediately) for a client. The contract calls for a monthly fee of $2,600, and the client paid the first five months' fees in advance. When the cash was received, the Unearned Training Fees account was credited. The fee for the sixth month will be recorded when it is collected in 2018.

On October 15, WTI agreed to teach a four-month class (beginning immediately) for an individual for $5,520 tuition per month payable at the end of the class. The class started on October 15, but no payment has yet been received. (WTI's accruals are applied to the nearest half-month; for example, October recognizes one-half month accrual.)

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.

The balance in the Prepaid Rent account represents rent for December.

WELLS TECHNICAL INSTITUTE Unadjusted Trial Balance December 31, 2017
	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		71,718
Accumulated depreciation—Equipment					16,396
Accounts payable					35,159
Salaries payable					0
Unearned training fees					13,000
T. Wells, Capital					65,169
T. Wells, Withdrawals		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	$	282,400		$	282,400

Problem 3-3A Part 2

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

Answer 1

WELLS TECHNICAL INSTITUTE									T-accounts
adjusted Trial Balance
31-Dec-17							Cash					Equipment
	Debit	Credit				Unadj bal	26,642				Unadj bal	71,718
Cash	26,642
Accounts receivable	13800					adj bal	26,642				adj bal	71,718
Teaching supplies	3,578
Prepaid insurance	11242
Prepaid rent	0						Accounts receivable
Professional library	30,739					Unadj bal	0					Accumulated depreciation—Equipment
Accumulated depreciation—Professional library		17,481					13800				Unadj bal			16,396
Equipment	71,718					adj bal	13800							16515
Accumulated depreciation—Equipment		32,911									adj bal			32,911
Accounts payable		35,159
Salaries payable		400					Teaching supplies					Accounts payable
Unearned training fees		7,800				Unadj bal	10,245				Unadj bal			35,159
T. Wells, Capital		65,169							6667
T. Wells, Withdrawals	40,988					adj bal	3578				adj bal			35,159
Tuition fees earned		118316
Training fees earned		44137					Prepaid insurance					Salaries payable
Depreciation expense—Professional library	8258					Unadj bal	15,371				Unadj bal			0
Depreciation expense—Equipment	16515								4129					400
Salaries expense	49586					adj bal	11242				adj bal			400
Insurance expense	4129
Rent expense	24600						Prepaid rent					Unearned training fees
Teaching supplies expense	6667					Unadj bal	2,050				Unadj bal			13,000
Advertising expense	7,173								2,050			5200
Utilities expense	5,738					adj bal	0				adj bal			7800
Totals	321,373	321,373
							Professional library					T. Wells, Capital
						Unadj bal	30,739				Unadj bal			65,169
						adj bal	30,739				adj bal			65,169
						Accumulated depreciation—Professional library						T. Wells, Withdrawals
						Unadj bal			9,223		Unadj bal	40,988
									8258
						adj bal			17,481		adj bal	40,988
							Tuition fees earned					Insurance expense
						Unadj bal			104,516		Unadj bal	0
									13800			4129
						adj bal			118316		adj bal	4129
							Training fees earned					Rent expense
						Unadj bal			38,937		Unadj bal	22,550
									5200			2050
						adj bal			44137		adj bal	24600
						Depreciation expense—Professional library						Teaching supplies expense
						Unadj bal	0				Unadj bal	0
							8258					6667
						adj bal	8258				adj bal	6667
						Depreciation expense—Equipment						Advertising expense
						Unadj bal	0				Unadj bal	7,173
							16515
						adj bal	16515				adj bal	7,173
							Salaries expense					Utilities expense
						Unadj bal	49,186				Unadj bal	5,738
							400
						adj bal	49586				adj bal	5,738