Question

Required information [The following information applies to the questions displayed below.) 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. WTI initially records prepaid expenses and unearned revenues in balance sheet accounts. Its unadjusted trial balance as of December 31 follows along with descriptions of items a through h that require adjusting entries on December 31. 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. c. Annual depreciation on the equipment is $11,227. d. Annual depreciation on the professional library is $5,614. e. On September 1, WTI agreed to do five courses for a client for $2,500 each. Two courses will start immediately and finish before the end of the year. Three courses will not begin until next year. The client paid $12,500 cash in advance for all five courses on September 1, and WTI credited Unearned Training Fees. f. On October 15, WTI agreed to teach a four-month class (beginning immediately) for an executive with payment due at the end of the class. At December 31, $7,548 of the tuition has been earned by WTI. g. WTl'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.

WELLS TECHNICAL INSTITUTE Unadjusted Trial Balance December 31 Credit $ Debit 26,340 0 10,129 15,197 2,027 30,391 $ 9, 119 98,000 16, 210 23,000 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 12,500 19,640 84,000 40,523 103,332 38,496 0 48,628 0 22,297 0 7,092 5,673 $ 306,297 $306,297 $306, 297

3-a. Prepare Wells Technical Institute's income statement for the year.

3-b. Prepare Wells Technical Institute's statement of retained earnings for the year. The Retained Earnings account balance was $84,000 on December 31 of the prior year.
3-c. Prepare Wells Technical Institute's balance sheet as of December 31.

Required information $84,000 on December 31 of the prior year. 3-c. Prepare Wells Technical Institute's balance sheet as of December 31. Complete this question by entering your answers in the tabs below. Req ЗА Req 3B Req 3C Prepare Wells Technical Institute's statement of retained earnings for the year. The Retained Earnings account balance was $84,000 on December 31 of the prior year. WELLS TECHNICAL INSTITUTE Statement of Retained Earnings For Year Ended December 31 Retained earnings, December 31 prior year end 0 Retained earnings, December 31 current year end $ 0

Prepare Wells Technical Institute's balance sheet as of December 31. Include all balance sheet accounts, even those with zero balances. WELLS TECHNICAL INSTITUTE Balance Sheet December 31 0 0 $ 0 0

Answer 1

Credit Adjusting Journals: Sl.no Account title a. Insurance Expense Prepaid Insurance (To record the insurance expense) Debit $ 2,807 $ 2,807 $ 7,696 b. Teaching Supplies Expense Teaching Supplies (To record the supplies expense)[$10,129-2,433] $ 7,696 $ 11,227 c. Depreciation Expense-Equipment Accumulated Depreciation-Equipment (To record the equipment depreciation) $ 11,227 $ 5,614 d. Depreciation Expense-Library Accumulated Depreciation-Library (To record the library depreciation) $ 5,614 $ 5,000 e. Unearned Training Fee Training Fees earned (To record the revenue for two courses $ 5,000 $ 7,548 f. Accounts Receivable Tution Fee earned (To record the tution fee earned) $ 7,548 $ 400 g. Salaries Expenses Salaries payable (To record the accrues salaries for 2 workers for 2 days @ $100) $ 400 $ 2,027 h. Rent Expense Prepaid Rent (To record the Rent expenses) [$2,027-2,027]=$0 $ 2,027

$ Unadjusted Adjustments Adjusted Trial Balance Account Particulars Debit Credit Debit Credit Debit Credit Cash $ 26,340 $ 26,340 Accounts Receivable $ $ 7,548 $ 7,548 Teaching Supplies $ 10,129 $ 7,696 $ 2,433 Prepaid Insurance $ 15,197 $ 2,807 $ 12,390 Prepaid Rent $ 2,027 $ 2,027 $ Professional Library $ 30,391 $ 30,391 Accumulated Depreciation-Library $ 9,119 $ 5,614 $ 14,733 Equipment $ 98,000 $ 98,000 Accumulated Depreciation-Equipment $ 16,210 $ 11,227 $ 27,437 Accounts payable $ 23,000 $ 23,000 Salaries payable $ $ 400 $ 400 Unearned training fees $ 12,500 $ 5,000 $ 7,500 Common Stock $ 19,640 $ 19,640 Retained Earnings $ 84,000 $ 84,000 Dividends $ 40,523 $ 40,523 Tution Fees earned $ 103,332 $ 7,548 $ 110,880 Training fees earned $ 38,496 $ 5,000 $ 43,496 Depreciation expenses-Library $ 5,614 5,614 Depreciation expenses-Equipment $ $ 11,227 11,227 Salaries expense $ 48,628 $ 400 $ 49,028 Insurance expense $ $ 2,807 $ 2,807 Rent expense $ 22,297 $ 2,027 $ 24,324 Teaching supplies expense $ $ 7,696 $ 7,696 Advertising expense $ 7,092 $ 7,092 Utilities expense $ 5,673 $ 5,673 TOTAL $ 306,297 $ 306,297$ 42,319 $ 42,319 $ 331,086 $ 331,086 $ $ $ ATA

WELLS TECHNICAL INSTITUTE Retained Earnings Statement For the Ended December 31 Retained Earnings, Dec,31 prior year end $ 84,000 Add: Net Income $ 40,915 $ 124,915 Less: Dividends $ 40,523 Retained Earnings, Dec 31, $ 84,392 WELLS TECHNICAL INSTITUTE Income Statement For the Ended December 31 Revenue Tution Fees earned $ 110,880 Training fees earned $ 43,496 Total Revenue $ 154,376 Expenses: Depreciation expenses-Library $ 5,614 Depreciation expenses-Equipment $ 11,227 Salaries expense $ 49,028 Insurance expense $ 2,807 Rent expense $ 24,324 Teaching supplies expense $ 7,696 Advertising expense $ 7,092 Utilities expense $ 5,673 Total Expenses $ 113,461 Net Income $ 40,915 WELLS TECHNICAL INSTITUTE Balance sheet December 31 Assets: Current Assets Cash $ 26,340 Accounts Receivable $ 7,548 Teaching supplies $ 2,433 Prepaid Insurance $ 12,390 Prepaid Rent $ 0 Total Current Assets $ 48,711 Plant Assets Professional library $ 30,391 Accumulated depreciation - Library -$ 14,733 $ 15,658 Equipment $ 98,000 Accumulated depreciation - Equipment $ 27,437 S 70,563 Total Plant Assets $ 86,221 Total Assets $134,932 Liabilities: Current Liabilities Accounts payable S 23,000 Salaries payable $ 400 Unearned training fees $ 7,500 Total Liabilities $ 30,900 Shareholders Equity: Common Stock $ 19,640 Retained Earnings $ 84,392 Total Shareholders Equity $ 104,032 Total Liablities and Equity $ 134,932 $

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