Watson Technical Institute (WTI), a school owned by Tom Watson, 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, 2011, 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, 2011, follow.
Additional Information Items
a. An analysis of WTI’s insurance policies shows that $2,807 of coverage has expired.
b. An inventory count shows that teaching supplies costing $2,433 are available at year-end 2011.
c. Annual depreciation on the equipment is $11,227.
d. Annual depreciation on the professional library is $5,614.
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 $2,700, 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 2012.
f.
On October 15, WTI agreed to teach a four-month class (beginning immediately) for an individual for $2,819 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.
WATSON TECHNICAL INSTITUTE
Unadjusted Trial Balance
December 31, 2011
Debit Credit
Cash $ 26,340
Accounts receivable 0
Teaching supplies 10,129
Prepaid insurance 15,197
Prepaid rent 2,027
Professional library 30,391
Accumulated depreciation—Professional library $ 9,119
Equipment 70,903
Accumulated depreciation—Equipment 16,210
Accounts payable 34,112
Salaries payable 0
Unearned training fees 13,500
T. Watson, Capital 64,431
T. Watson, Withdrawals 40,523
Tuition fees earned 103,332
Training fees earned 38,496
Depreciation expense—Professional library 0
Depreciation expense—Equipment 0
Salaries expense 48,628
Insurance expense 0
Rent expense 22,297
Teaching supplies expense 0
Advertising expense 7,092
Utilities expense 5,673
Totals $ 279,200 $ 279,200
4.
value:
17.00 points
Required:
2.
Prepare the necessary adjusting journal entries for items a through h. Assume that adjusting entries are made only at year-end. (Round your answer to nearest dollar amount. Omit the “$” sign in your response.)
Adjusting entries (all dated Dec. 31, 2011).
General Journal Debit Credit
a.
b.
c.
d.
e.
f.
g.
h.
eBook Links (4)references
5.
value:
16.00 points
3.1
Post the balance from the unadjusted trial balance and the adjusting entries in to the T-accounts. (Record the transactions in the given order. Round your answers to the nearest dollar amount. Leave no cells blank – be certain to enter “0” wherever required. Omit the “$” sign in your response.)
Cash
Unadj. bal.
Accounts Receivable
Unadj. bal.
Adj. bal.
Teaching Supplies
Unadj. bal.
Adj. bal.
Prepaid Insurance
Unadj. bal.
Adj. bal.
Prepaid Rent
Unadj. bal.
Adj. bal.
Professional Library
Unadj. bal.
Accumulated Depreciation—Professional library
Unadj. bal.
Adj. bal.
Equipment
Unadj. Bal.
Accumulated Depreciation—Equipment
Unadj. bal.
Adj. bal.
Accounts Payable
Unadj. bal.
Salaries Payable
Unadj. bal.
Adj. bal.
Unearned Training Fees
Unadj. bal.
Adj. bal.
T. Watson, Capital
Unadj. bal.
T. Watson, Withdrawals
Unadj. bal.
Tuition Fees Earned
Unadj. bal.
Adj. bal.
Training Fees Earned
Unadj. bal.
Adj. bal.
Depreciation Expense—Professional Library
Unadj. bal.
Adj. bal.
Depreciation Expense—Equipment
Unadj. bal.
Adj. bal.
Salaries Expense
Unadj. bal.
Adj. bal.
Insurance Expense
Unadj. bal.
Adj. bal.
Rent Expense
Unadj. bal.
Adj. bal.
Teaching Supplies Expense
Unadj. bal.
Adj. bal.
Advertising Expense
Unadj. bal.
Utilities Expense
Unadj. bal.
3.2
Prepare an adjusted trial balance. (The items in the Trial Balance should be grouped as follows: Assets and Liabilities (in order of their liquidity) then Equity, Revenues, and Expenses. Leave no cells blank – be certain to enter “0” wherever required. Round your answers to the nearest dollar amount. Omit the “$” sign in your response.)
Watson Technical Institute
Adjusted Trial Balance
December 31, 2011
Debit Credit
$
$
Totals $ $
eBook Links (4)references
6.
value:
16.00 points
4.1
Prepare Watson technical institute’s income statement for the year 2011. (Round your answer to nearest dollar amount. Input all amounts as positive values. Omit the “$” sign in your response.)
WATSON TECHNICAL INSTITUTE
Income Statement
For Year Ended December 31, 2011
Revenues
$
Total revenues $
Expenses
Total expenses
$
4.2
Prepare Watson technical institute’s statement of owner’s equity for the year 2011. (Round your answer to nearest dollar amount. Input all amounts as positive values. Omit the “$” sign in your response.)
WATSON TECHNICAL INSTITUTE
Statement of Owner’s Equity
For Year Ended December 31, 2011
$
$
4.3
Prepare Watson technical institute’s balance sheet as of December 31, 2011. (Round your answer to nearest dollar amount. Be sure to list the assets and liabilities in order of their liquidity. Amounts to be deducted should be indicated by a minus sign. Omit the “$” sign in your response.)
WATSON TECHNICAL INSTITUTE
Balance Sheet
December 31, 2011
Assets
$
$
Total Assets $
Liabilities
$
Total Liabilities
Equity
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