1.

For each separate case below, follow the three-step process for adjusting the prepaid asset account at December 31. Step 1: Determine what the current account balance equals. Step 2: Determine what the current account balance should equal. Step 3: Record the December 31 adjusting entry to get from step 1 to step 2. Assume no other adjusting entries are made during the year.

2-a. Post the balance from the unadjusted trial balance and the adjusting entries in to the T-accounts.

a. Prepaid Insurance. The Prepaid Insurance account has a $5,300 debit balance to start the year. A review of insurance policies and payments shows that $1,200 of unexpired insurance remains at year-end. Prepaid Insurance DR or CR? 5.300 Debit Step 1: Determine what the current account balance equals. | $ 5.300 4.100 Step 2: Determine what the current account balance should equal. L $ 1.200 Debit 1,200 Credit Step 3: Record the December 31, adjusting entry to get from step 1 to step 2. Adjusting Entry Insurance Expense Prepaid Insurance Debit 4,100 4,100 b. Prepaid Insurance. The Prepaid Insurance account has a $6,490 debit balance at the start of the year. A review of insurance policies and payments shows $1.280 of insurance has expired by year-end. DR or CR? 6,490 Debit Prepaid Insurance 6,490 Step 1: Determine what the current account balance equals. Step 2: Determine what the current account balance should equal. Debit Step 3: Record the December 31, adjusting entry to get from step 1 to step 2. Insurance Expense Prepaid Insurance c. Prepaid Rent. On September 1 of the current year, the company prepaid $31,200 for two years of rent for facilities being occupied that day. The company debited Prepaid Rent and credited Cash for $31,200. DR or CR? 31.200 Debit Prepaid Rent 31,200 Step 1: Determine what the current account balance equals. L $ Step 2: Determine what the current account balance should equal. Debit Step 3: Record the December 31, adjusting entry to get from step 1 to step 2. 31,200 Rent Expense Prepaid Rent 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, 2017 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, 2017, follow. Additional Information Items a. An analysis of WTI's Insurance policies shows that $3,996 of coverage has expired. b. An Inventory count shows that teaching supplies costing $3,464 are available at year-end 2017 c. Annual depreciation on the equipment is $15.986. d. Annual depreciation on the professional library Is $7,993. 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 $2,400, 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 2018. f. On October 15, WTI agreed to teach a four-month class (beginning Immediately) for an individual for $5.461 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.) 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, 2017 Credit $ Debit 27,396 10,536 15,806 2,108 31,610 $ 9,484 73,751 16,861 37,522 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 Common stock Retained earnings Dividends 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 12,000 13,00 54,016 42,149 107,477 42,040 50,579 23,188 7,376 5,901 $ 290,400 $ 290,400 Post the balance from the unadjusted trial balance and the adjusting entries in to the T-accounts - Cash Equipment Unadi. Bal. 27.390 Unadi. Bal. Adi Bal Ad Bal Accounts Receivable Accumulated Depreciation Equipment Unad Bal 13.8531 Adj. Bal. 13.8531 A Bal Teaching Supplies Accounts Payable Unadi. Bal. Unadj. Bal Adi Bal Prepaid Insurance Salaries Payable Unadi Bal Unadi. Bal. Adi Bal Ad Bal Prepaid Rent Unearned Training Fees Unadj. Bal. Unadj. Bal. Adj. Bal. Adi Bal Professional Library Common stock Unadi. Bal Unadal Adi Bal. AdjBalo Retained earnings Accumulated Depreciation-Professional Library Unadi. Bal Unad, Bal Adi Bal Tuition Fees Earned Dividends Unad Bal Unadi. Bal Adj. Bal. Adj. Bal. O Ad Bal 4o Bal T Retained earnings Accumulated Depreciation-Professional Library Unad Bal Unadi. Bal Adj. Bal. Tuition Fees Earned Dividends Unad Bal Unada Ad Bal Adi Bal Training Fees Earned Rent Expense Unadi Ball Unadi. Bal Adi Bal Adi Bal Teaching Supplies Expense Depreciation Expense-Professional Library Unadj. Bal. Unadj. Bal. Adj. Bal. Adi. Bal. Advertising Expense Depreciation Expense-Equipment Unadj. Bal. Unadi. Bal Adj. Bal 0 Adj. Bal 0 Salaries Expense Utilities Expense Unad Bal Unad Ba Adi Bal O Insurance Expense Unad Bal