ACCOUNTING

[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 $2,400 of coverage has expired.
b. An inventory count shows that teaching supplies costing $2,800 are available at year-end 2013.
c. Annual depreciation on the equipment is $13,200.
d. Annual depreciation on the professional library is $7,200.
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 2014.
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 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 $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, 2013
  Debit   Credit
  Cash $ 34,000
  Accounts receivable 0
  Teaching supplies 8,000
  Prepaid insurance 12,000
  Prepaid rent 3,000
  Professional library 35,000
  Accumulated depreciation—Professional library $ 10,000
  Equipment 80,000
  Accumulated depreciation—Equipment 15,000
  Accounts payable  26,000
  Salaries payable 0
  Unearned training fees 12,500
  Common stock 10,000
  Retained earnings 80,000
  Dividends 50,000
  Tuition fees earned 123,900
  Training fees earned 40,000
  Depreciation expense—Professional library 0
  Depreciation expense—Equipment 0
  Salaries expense 50,000
  Insurance expense 0
  Rent expense 33,000
  Teaching supplies expense 0
  Advertising expense 6,000
  Utilities expense 6,400




  Totals $ 317,400 $ 317,400








 

 

Problem 3-3A Part 1

1. Prepare the necessary adjusting journal entries for items a through h.

Problem 3-3A Part 2

2.1 Post the balance from the unadjusted trial balance and the adjusting entries to the T-accounts

 

2.2 Prepare an adjusted trial balance.

Problem 3-3A Part 3

3.1 Prepare Wells Technical Institute’s income statement for the year 2013.

Problem 3-8A Preparing closing entries, financial statements, and ratios C4 A2 A3 P3 P4

The adjusted trial balance for Tybalt Construction as of December 31, 2013, follows.
TYBALT CONSTRUCTION
Adjusted Trial Balance
December 31, 2013
 No. Account Title Debit Credit
101   Cash $ 5,000
104   Short-term investments 23,000
126   Supplies 8,100
128   Prepaid insurance 7,000
167   Equipment 40,000
168   Accumulated depreciation—Equipment $ 20,000
173   Building 150,000
174   Accumulated depreciation—Building 50,000
183   Land 55,000
201   Accounts payable 16,500
203   Interest payable 2,500
208   Rent payable 3,500
210   Wages payable 2,500
213   Property taxes payable 900
233   Unearned professional fees 7,500
251   Long-term notes payable 67,000
307   Common stock 5,000
318   Retained earnings 121,400
319   Dividends 13,000
401   Professional fees earned 97,000
406   Rent earned 14,000
407   Dividends earned 2,000
409   Interest earned 2,100
606   Depreciation expense—Building 11,000
612   Depreciation expense—Equipment 6,000
623   Wages expense 32,000
633   Interest expense 5,100
637   Insurance expense 10,000
640   Rent expense 13,400
652   Supplies expense 7,400
682   Postage expense 4,200
683   Property taxes expense 5,000
684   Repairs expense 8,900
688   Telephone expense 3,200
690   Utilities expense 4,600


  Totals $ 411,900 $ 411,900





O. Tybalt invested $5,000 cash in the business in exchange for more common stock during year 2013 (the December 31, 2012, credit balance of retained earnings was $121,400). Tybalt Construction is required to make a $7,000 payment on its long-term notes payable during 2014.
Required:
1.1 Prepare the income statement for the calendar year 2013

 

 

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