3335 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. WTI initially records prepaid expenses and unearned revenues in balance sheet accounts. Its unadjusted trial balance as of December 31 follows along with descriptions of items a through h that require adjusting entries on December 31.

A

Dr. Insurance Expense3335

Cr. Prepaid Insurance3335

Being Insurance policies expired during the period

B

Dr. Teaching supplies expense( 10,420 – 2,891)7,529

Cr. Teaching Supplies 7,529

Being teaching supplies made for the period

C

Dr. Depreciation Expense - Equipment13,342

Cr. Accumulated Depreciation - Equipment13,342

Being Equipment Depreciation expense for the period

D

Dr. Depreciation Expense – Professional Library6,671

Cr. Accumulated Depreciation – Professional Library6,671

Being Depreciation of Professional Library for the period

E

Dr. Unearned Training Fees (2 months * 3000) ...6,000

Cr. Training fees earned6,000

Being recognition of revenue against prepaid income for Nov and Dec  

F

Dr. Tuition Receivable (2.5 months x 3,561) ...8,902.5

Cr. Tuition earned 8,902.5

Being recognition of Tuition revenue against Account receivable for Oct 15 to Dec  

G

Dr. Wages Payable400

Cr. Accrued Wages400  

Being Wages Accrued for 2 workers for 2 days as at Dec 31st  at the rate $100 per day

Explanation:

Required:

1. Prepare the necessary adjusting journal entries for items a through h. Assume that adjusting entries are made only at year-end.  

Additional Information Items

1.An analysis of WTI's insurance policies shows that $3,335 of coverage has expired.

2.An inventory count shows that teaching supplies costing $2,891 are available at year-end 2017.

3.Annual depreciation on the equipment is $13,342.

4.Annual depreciation on the professional library is $6,671.

5.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 $3,000, 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.

6.On October 15, WTI agreed to teach a four-month class (beginning immediately) for an individual for $3,561 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.)

7.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.  

JOURNAL ENTRIES

A

Dr. Insurance Expense3335

Cr. Prepaid Insurance3335

Being Insurance policies expired during the period

B

Dr. Teaching supplies expense( 10,420 – 2,891)7,529

Cr. Teaching Supplies 7,529

Being teaching supplies made for the period

C

Dr. Depreciation Expense - Equipment13,342

Cr. Accumulated Depreciation - Equipment13,342

Being Equipment Depreciation expense for the period

D

Dr. Depreciation Expense – Professional Library6,671

Cr. Accumulated Depreciation – Professional Library6,671

Being Depreciation of Professional Library for the period

E

Dr. Unearned Training Fees (2 months * 3000) ...6,000

Cr. Training fees earned6,000

Being recognition of revenue against prepaid income for Nov and Dec  

F

Dr. Tuition Receivable (2.5 months x 3,561) ...8,902.5

Cr. Tuition earned 8,902.5

Being recognition of Tuition revenue against Account receivable for Oct 15 to Dec  

G

Dr. Wages Payable400

Cr. Accrued Wages400  

Being Wages Accrued for 2 workers for 2 days as at Dec 31st  at the rate $100 per day

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