Reference no: EM131261473

A Preparing adjusting entries, adjusted trial balance, and financial statements LO A1, P1, P2, P3 [The following information applies to the questions displayed below.] 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, 2013, 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, 2013, follow. Additional Information Items a. An analysis of WTI's insurance policies shows that $2,700 of coverage has expired. b. An inventory count shows that teaching supplies costing $3,100 are available at year-end 2013. c. Annual depreciation on the equipment is $13,800. d. Annual depreciation on the professional library is $7,800. 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 $3,100, 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 2014. f. On October 15, WTI agreed to teach a four-month class (beginning immediately) for an individual for $3,600 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.) g. WTI's two employees are paid weekly. As of the end of the year, two days' salaries have accrued at the rate of $160 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, 2013 Debit Credit Cash $ 40,000 Accounts receivable 0 Teaching supplies 8,600 Prepaid insurance 12,600 Prepaid rent 3,600 Professional library 41,000 Accumulated depreciation—Professional library $ 10,600 Equipment 86,000 Accumulated depreciation—Equipment 15,600 Accounts payable 32,600 Salaries payable 0 Unearned training fees 15,500 Common stock 16,000 Retained earnings 86,000 Dividends 56,000 Tuition fees earned 131,100 Training fees earned 46,000 Depreciation expense—Professional library 0 Depreciation expense—Equipment 0 Salaries expense 56,000 Insurance expense 0 Rent expense 36,000 Teaching supplies expense 0 Advertising expense 6,600 Utilities expense 7,000 Totals $ 353,400 $ 353,400