Question;Preparing adjusting entries;adjusted trial balance, and;financial statements;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, 2005, 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, 2005, follow.;Additional Information Items a. An analysis of the school?s insurance policies shows that $3,000 of coverage has expired. b. An inventory count shows that teaching supplies costing $2,600 are available at year-end 2005.;c. Annual depreciation on the equipment is $12,000. d. Annual depreciation on the professional library is $6,000. 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 $2,200, 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 2006. f. On October 15, the school 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 services are being;provided as agreed, and no payment has yet been received. g. The school?s two employees are paid weekly. As of the end of the year, two days? wages have;accrued at the rate of $100 per day for each employee. h. The balance in the Prepaid Rent account represents rent for December. Required 1. Prepare T-accounts (representing the ledger) with balances from the unadjusted trial balance. 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 Watson Technical Institute?s income statement and statement of owner?s equity for the;year 2005 and prepare its balance sheet as of December 31, 2005. Check (2e) Cr.Training Fees Earned;$4,400, (2f) Cr.Tuition Fees Earned;$7,500, (3) Adj.Trial balance totals;$301,500, (4) Net income, $38,500;Ending T.Watson, Capital $62,100;Cash Debit 26,000;Accounts receivable 0;Teaching supplies Debit 10,000;Prepaid insurance Debit 15,000;Prepaid rent Debit 2,000;Professional library Debit 30,000;Accumulated depreciation?Professional library Credit 9,000;Equipment Debit 70,000;Accumulated depreciation?Equipment credit 16,000;Accounts payable Credit 36,000;Salaries payable 0;Unearned training fees credit 16,000;Tuition fees earned credit 102,000;Training fees earned credit 38,000;Depreciation expense?Professional library 0;Depreciation expense?Equipment 0;Salaries expense Debit 48,000;Insurance expense 0;Rent expense debit 22,000;Teaching supplies expense 0;Advertising expense Debit 7,000;Utilities expense Debit 5,600;T. Watson, Capital Credit 63,600;T. Watson, Withdrawals Debit 40,000;Totals 275,600;Required;Adjusting Entries, T-Accounts, Adjusted Trial Balance, Income Statement, Balance Sheet.
Paper#45160 | Written in 18-Jul-2015Price : $32