Wells Technical Institute (WTI), a school owned by Tristana Wells, provides tralning to Individuals who pay tultion directly to the school. WTI also offers training to groups In off-site locati

Wells Technical Institute (WTI), a school owned by Tristana Wells, provides tralning to Individuals who pay tultion directly to the school. WTI also offers training to groups In off-site locations. Its unadjusted trial balance as of December 31, 2015, follows. WTI Initially records prepald expenses and unearned revenues In balance sheet accounts. Descriptions of items a through h that requlre adjusting entries on December 31, 2015, follow Additional Information Items a. An analysls of WTIs Insurance policles shows that $2,400 of coverage has explred. b. An Inventory count shows that teaching supples costing $2,800 are avallable at year-end 2015 C. Annual depreclation on the equipment is $13,200. d. Annual depreclation on the professlonal library Is $7,200. e. On November 1, WTI agreed to do a special six-month course (starting Immedlately) for a client. The contract calls for a monthly fee of $2,500, and the client pald the first five months fees in advance. When the cash was recelved, the Unearned Tralning Fees account was credited. The fee for the sixth month wll be recorded when It Is collected In 2016 f On October 15, WTI agreed to teach a four-month class (beginning Immediately) for an Individual for $3,000 tuition per month payable at the end of the class. The class started on October 15, but no payment has yet been recelved. (WTIs accruals are applied to the nearest half-month; for example, October recognizes one-half month accrual.) g. WTIs two employees are pald 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 Prepald Rent account represents rent for December. WELLS TECHNICAL INSTITUTE Unadjusted Trial Balance December 31, 2015 Credit Debit 34,000 0 8,000 12,000 3,000 35,000 Cash Accounts recelvable Teaching supples Prepald Insurance Prepald rent Professlonal library Accumulated depreciation-Professlonal library Equipment Accumulated depreclation-Equlpment Accounts payable Salaries payable Unearned tralning fees Common stock Retalned earnings Dividends Tultion fees earned Tralning fees earned Depreclation expense Professlonal library Depreclation expense Equlpment Salarles expense Insurance expense Rent expense Teaching supplles expense Advertising expense Utilities expense $ 10,000 80,000 15,000 26,000 0 12,500 10,000 80,000 50,000 123,900 40,000 0 0 50,000 0 33,000 0 6,000 6,400 Totals 317,400 317,400

Wells Technical Institute (WTI), a school owned by Tristana Wells, provides tralning to Individuals who pay tultion directly to the school. WTI also offers training to groups In off-site locations. Its unadjusted trial balance as of December 31, 2015, follows. WTI Initially records prepald expenses and unearned revenues In balance sheet accounts. Descriptions of items a through h that requlre adjusting entries on December 31, 2015, follow Additional Information Items a. An analysls of WTI’s Insurance policles shows that $2,400 of coverage has explred. b. An Inventory count shows that teaching supples costing $2,800 are avallable at year-end 2015 C. Annual depreclation on the equipment is $13,200. d. Annual depreclation on the professlonal library Is $7,200. e. On November 1, WTI agreed to do a special six-month course (starting Immedlately) for a client. The contract calls for a monthly fee of $2,500, and the client pald the first five months’ fees in advance. When the cash was recelved, the Unearned Tralning Fees account was credited. The fee for the sixth month wll be recorded when It Is collected In 2016 f On October 15, WTI agreed to teach a four-month class (beginning Immediately) for an Individual for $3,000 tuition per month payable at the end of the class. The class started on October 15, but no payment has yet been recelved. (WTI’s accruals are applied to the nearest half-month; for example, October recognizes one-half month accrual.) g. WTI’s two employees are pald 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 Prepald Rent account represents rent for December. WELLS TECHNICAL INSTITUTE Unadjusted Trial Balance December 31, 2015 Credit Debit 34,000 0 8,000 12,000 3,000 35,000 Cash Accounts recelvable Teaching supples Prepald Insurance Prepald rent Professlonal library Accumulated depreciation-Professlonal library Equipment Accumulated depreclation-Equlpment Accounts payable Salaries payable Unearned tralning fees Common stock Retalned earnings Dividends Tultion fees earned Tralning fees earned Depreclation expense Professlonal library Depreclation expense Equlpment Salarles expense Insurance expense Rent expense Teaching supplles expense Advertising expense Utilities expense $ 10,000 80,000 15,000 26,000 0 12,500 10,000 80,000 50,000 123,900 40,000 0 0 50,000 0 33,000 0 6,000 6,400 Totals 317,400 317,400

Expert Answer

 

1. Journal

No. Account Name Debit Credit
a. Insurance expense $2400
Prepaid insurance $2400
(To record the expiry of prepaid insurance)
b. Supplies expense 5200
Supplies 5200
(To record the supplies expense)
c. Depreciation expense 13200
Accumulated depreciation-Equipment 13200
(To record depreciation on equipment)
d. Depreciation expense 7200
Accumulated depreciation-Professional library 7200
(To record depreciation on Professional library)
e. Unearned training fee 2500
Training fees earned 2500
(To record training fees earned)
f. Accounts receivable 7500
Tuition fees earned 7500
(To record tuition fees earned for 2.5 months)
g. Salaries expense (2 x 2 days x $100) 400
Salaries payable 400
(To record salarie due)
h. Rent expense 3000
Prepaid Rent 3000
(To record rent expense for December)

2. Adjusted Trial Balance

Debit Credit
Cash $34000
Accounts receivable 7500
Teaching supplies 2800
Prepaid Insurance 9600
Prepaid rent 0
Professional library 35000
Accumulated depreciation – Professional library $17200
Equipment 80000
Accumulated depreciation – Equipment 28200
Accounts payable 26000
Salaries payable 400
Unearned training fees 10000
Common stock 10000
Retained earnings 80000
Dividends 50000
Tuition fees earned 131400
Training fees earned 42500
Depreciation expense – Professional library 7200
Depreciation expense – Equipment 13200
Salaries expense 50400
Insurance expense 2400
Rent expense 36000
Teaching supplies expense 5200
Advertising expense 6000
Utilities expense 6400
Total $345700 $345700

3.

Income statement

Revenues:
Tuition fees earned $131400
Training fees earned 42500
Total revenue $173900
Expenses:
Depreciation expense – Professional library $7200
Depreciation expense – Equipment 13200
Salaries expense 50400
Insurance expense 2400
Rent expense 36000
Teaching supplies expense 5200
Advertising expense 6000
Utilities expense 6400
Total expenses $126800
Net income $47100

4. Statement of retained earnings

Retained earnings, December 31, 2014 $80000
Add: Net income 47100
127100
Less: Dividends -50000
Retained earnings, December 31, 2015 $77100
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