Problem 3-3A Preparing adjusting entries, adjusted trial balance, and financial statements
LO A1, P1, P2, P3
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.
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 $2,700, 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.
On October 15, WTI agreed to teach a four-month class (beginning immediately) for an
individual for $3,080 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.)
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.
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.
Solution
I couldn\'t read your trial balance. So let me give you some tips to look for.
Do all of the trial balances balance? Meaning the beginning, the adjustments (which should
balance to zero) and the adjusted trial balance. Maybe an excel spreadsheet might help.
The balance sheet should be up to dividends.
What could be missing from your balance sheet is the income statement balance. That would
appear in your retained earnings section.
LO A1, P1, P2, P3
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.
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 $2,700, 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.
On October 15, WTI agreed to teach a four-month class (beginning immediately) for an
individual for $3,080 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.)
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.
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.
Solution
I couldn\'t read your trial balance. So let me give you some tips to look for.
Do all of the trial balances balance? Meaning the beginning, the adjustments (which should
balance to zero) and the adjusted trial balance. Maybe an excel spreadsheet might help.
The balance sheet should be up to dividends.
What could be missing from your balance sheet is the income statement balance. That would
appear in your retained earnings section.
