Wells Teaching Institute (WTI), a school owned by Tracey Wells, provides training to individuals who pay tuition
Question:
Additional Information Items
a. An analysis of the schools insurance policies shows that $3,000 of coverage has expired.
b. An inventory count shows that teaching supplies costing $2,000 are available at year-end 2011.
c. Annual depreciation on the equipment is $10,000.
d. Annual depreciation on the professional library is $5,000.
e. On November 1, the school 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 earned and collected in 2012.
f. On October 15, the school agreed to teach a four-month class (beginning immediately) for an individual for $1,600 tuition per month payable at the end of the class. The services are being provided as agreed, and no payment has yet been received.
g. The schools two employees are paid weekly. As of the end of the year, two days salaries have accrued at the rate of $120 per day for each employee.
h. The balance in the Prepaid Rent account represents rent for December.
Wells Teaching Institute
Unadjusted Trial Balance
December 31, 2011
Required
1. For accounts listed in the unadjusted trial balance, prepare T-accounts (representing the ledger) and enter the unadjusted balances.
2. Prepare the necessary adjusting journal entries for items a through h and post them to the T-accounts. Assume that adjusting entries are made only at year-end.
3. Update balances in the T-accounts for the adjusting entries and prepare an adjusted trial balance.
4. Prepare Wells Teaching Institutes income statement and statement of retained earnings for the year 2011and prepare its balance sheet as of December 31, 2011.
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
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