FINANCE

Problem 3-1A Identifying adjusting entries with explanations LO C3, P1

For each of the following entries, enter the letter of the explanation that most closely describes

it in the space beside each entry. (You can use letters more than once.)

 

A.  To record receipt of unearned revenue.
B.  To record this period’s earning of prior unearned revenue.
C.  To record payment of an accrued expense.
D.  To record receipt of an accrued revenue.
E.  To record an accrued expense.
F.  To record an accrued revenue.
G.  To record this period’s use of a prepaid expense.
H.  To record payment of a prepaid expense.
I.  To record this period’s depreciation expense.

   
lanation Journal Entries Debit Credit
Interest Expense 1,000
Interest Payable 1,000
Depreciation Expense 4,000
Accumulated Depreciation 4,000
Unearned Professional Fees 3,000
Professional Fees Earned 3,000
Insurance Expense 4,200
Prepaid Insurance 4,200
Salaries Payable 1,400
Cash 1,400
Prepaid Rent 4,500
Cash 4,500
Salaries Expense 6,000
Salaries Payable 6,000
Interest Receivable 5,000
Interest Revenue 5,000
Cash 9,000
Accounts Receivable (from consulting) 9,000
Cash 7,500
Unearned Professional Fees 7,500
Cash 2,000
Interest Receivable 2,000
Rent Expense 2,000
Prepaid Rent 2,000

Problem 3-3A 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 $2,400 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
  T. Wells, Capital       90,000
  T. Wells, Withdrawals   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

Required:
1. Prepare the necessary adjusting journal entries for items a through h. Assume that adjusting entries a

re made only at year-end.

Adjusting entries (all dated Dec. 31, 2013).

1. An analysis of WTI’s insurance policies shows that $2,400 of coverage has expired.

2. An inventory count shows that teaching supplies costing $2,800 are available at year-end 2013.

3. Annual depreciation on the equipment is $13,200.

4. Annual depreciation on the professional library is $7,200.

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 $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.

6. 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.)

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.

8. The balance in the Prepaid Rent account represents rent for December

Problem 3-3A Part 2

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

I can’t get the charts to copy here…

2.2 Prepare an adjusted trial balance.
WELLS TECHNICAL INSTITUTE
Adjusted Trial Balance
December 31, 2013
Debit Credit
Cash
Accounts receivable
Teaching supplies
Prepaid insurance
Prepaid rent
Professional library
Accumulated depreciation—Professional library
Equipment
Accumulated depreciation—Equipment
Accounts payable
Salaries payable
Unearned training fees
T. Wells, Capital
T. Wells, Withdrawals
Tuition fees earned
Training fees earned
Depreciation expense—Professional library
Depreciation expense—Equipment
Salaries expense
Insurance expense
Rent expense
Teaching supplies expense
Advertising expense
Utilities expense
Totals

Order now and get 10% discount on all orders above $50 now!!The professional are ready and willing handle your assignment.

ORDER NOW »»