Prepare the necessary adjusting journal entries for items a through h . Assume t
ID: 2535837 • Letter: P
Question
Prepare the necessary adjusting journal entries for items a through h. Assume that adjusting entries are made only at year-end.
On October 15, WTI agreed to teach a four-month class (beginning immediately) for an individual for $2,699 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.)
I need account receivable and tuition fees earned I'm not sure how half-month accruals work.
Explanation / Answer
Tuition fees per month = $2,699
Tuition fees for half month = $2,699 / 2 = $1,349.50
Half month accrual adjusting journal entries would be:
Debit --- Tuition Fees Receivable (Balance Sheet item) $1,349.50
Credt --- Tuition Fees Earned (Income Statement) $1,349.50
Note -- We cannot recognize Accounts Receivable since we have not raised any invoice and the transaction is not yet confirmed by any document...so just to make accrual we will pass above journal entry.