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.
Additional Information Items
a. An analysis of WTI’s insurance policies shows that $3,071
of coverage has expired.
b. An inventory count shows that teaching supplies costing
$2,662 are available at year-end 2017.
c. Annual depreciation on the equipment is $12,285.
d. Annual depreciation on the professional library is $6,142.
e. 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 $2,500, 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.
f. On October 15, WTI agreed to teach a four-month class
(beginning immediately) for an individual for $3,540
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 halfmonth; for example, October recognizes one-half month
accrual.)
g. 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.
h. The balance in the Prepaid Rent account represents rent
for December. WELLS TECHNICAL INSTITUTE
Unadjusted Trial Balance
December 31, 2017 Cash
Accounts receivable
Teaching supplies
Prepaid insurance
Prepaid rent
Professional library
Accumulated depreciation—
Professional library
Equipment
Accumulated depreciation—Equipment
Accounts payable
Salaries payable
Unearned training fees
T. Wells, Capital
T. Wells, Withdrawals
Tuition fees earned
Training fees earned
Depreciation expense—Professional
library
Depreciation expense—Equipment
Salaries expense
Insurance expense
Rent expense
Teaching supplies expense
Advertising expense
Utilities expense
Totals Debit
$ 27,547
0
10,594
15,894
2,120
31,784 Credit $ 9,537 74,152
16,954
37,294
0
12,500
67,385
42,381
108,069
40,261
0
0
50,858
0
23,320
0
7,417
5,933
$292,000 $292,000 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.