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. WELLS TECHNICAL INSTITUTE
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.
C. Annual depreciation on the equipment is $12,285.
D. Annual depreciation on the professional library is $6,142.
E. On September 1, WTI agreed to do five courses for a client for $2,300 each. Two courses will start immediately and finish before the end of the year. Three courses will not begin until next year. The client paid $11,500 cash in advance for all five courses on September 1, and WTI credited Unearned Revenue.
F. On October 15, WTI agreed to teach a four-month class (beginning immediately) for an executive with payment due at the end of the class. At December 31, $9,350 of the tuition revenue has been earned by WTI.
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
Debit Credit
Cash $26,944
Accounts receivable 0
Teaching supplies 10,362
Prepaid insurance 15,545
Prepaid rent 2,073
Professional library 31,088
Accumulated depreciation—
Professional library $9,328
Equipment 72,533
Accumulated depreciation—Equipment 16,582
Accounts payable 33,702
Salaries payable 0
Unearned training fees 15,000
Common stock 15,000
Retained earnings 50,908
Dividends 41,452
Tuition fees earned 105,701
Training fees earned 39,379
Depreciation expense—Professional library 0
Depreciation expense—Equipment 0
Salaries expense 49,743
Insurance expense 0
Rent expense 22,803
Teaching supplies expense 0
Advertising expense 7,254
Utilities expense 5,803
Totals $285,600 $285,600
1. Post the balance from the unadjusted trial balance and the adjusting entries in to the T-accounts.
2. Prepare an adjusted trial balance, even if it does not match.