Question

Wells Technical Institute (WTI), a school owned by Tristana Wells, provides training to individuals who pay tultion directly to the school. WTI also offers training to groups in off-site locations. WTI Initially records prepaid expenses and uneared 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 $3,203 of coverage has expired. b. An Inventory count shows that teaching supplies costing $2,776 are available at year-end. c. Annual depreciation on the equipment is $12,814. d. Annual depreciation on the professional library is $6.407. e. On September 1, WTI agreed to do five courses for a client for $2,300 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 $11,500 cash in advance for all five courses on September 1, and WTI credited Unearned Training Fees. 1. 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, $10,000 of the tuition has been earned by WTI. g. Wil'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 Debit Credit Cash $ 27,245 Accounts receivable Teaching supplies 10,478 Prepaid insurance 15,719 Prepaid rent 2,097 Professional library 31,436 Accumulated depreciation- Professional Library $ 9,432 Equipment 73,338 Accumulated depreciation- 16,768 Equipment Accounts payable 37,749 Salaries payable Unearned training fees 11,500 T. Wells, Capital 66,646 T. Wells, Withdrawals 41,916 Tuition fees earned 106,885 Training fees earned 39,820 Depreciation expense- @ Professional library Depreciation expense-Equipment Salaries expense 50,300 Insurance expense Rent expense 23,067 Teaching supplies expense Advertising expense 7,336 Utilities expense 5,868 Totals $288,800 $288,800

Answer 1

WELLS TECHNICAL INSTITUTE
Income Statement
For the Year Ended December 31
Particulars	Amount($)	Amount($)
Revenue:
	Tuition fee		116,885
	Training fee		44,420
	Total revenue		161,305
Expenses:
	Salaries	50,700
	Insurance	3,203
	Rent	25,164
	Advertising Expenses	7,336
	Utilities Expenses	5,868
	Teaching Supplies consumed	7,702
	Depreciation expense Professional library	6,407
	Depreciation expense Equipment	12,814
	Total Expenses		(119,194)
	Net Income		42,111

WELLS TECHNICAL INSTITUTE
Balance Sheet
At December 31
Assets	Amount($)
Current Assets
Accounts Receivable		-
Cash		27,245
Teaching Supplies		2,776
Prepaid insurance		12,516
Tuition fee receivable		10,000
Total Current Assets		52,537
Non Current Assets
Equipment	73,338
Accumulated depreciation	(29,582)	43,756
Professional library	31,436
Accumulated depreciation	(15,839)	15,597
Total Non Current Assets		59,353
Total assets		111,890
Liabilities	Amount($)
Current liabilities
Accounts payable		37,749
Salaries Payable		400
Unearned training fees		6,900
Total Current liabilities		45,049
Owner's Equity
Capital		66,841
Total liabilities		111,890

WELLS TECHNICAL INSTITUTE
Statement of Owner's Equity
For the Year Ended December 31
		Amount($)
T. Wells Capital, December prior year end		66,646
Add:profit		42,111
		108,757
Less: withdrawals		41,916
T. Wells Capital, December current year end	66,841

Notes:

1.

Teaching Supplies consumed = 10478-2776 = $7702

2.

Unearned training fees = 2300*3 = $6900 Realised current year = 2300*2 =$4600

3.

Salaries Payable =100*2*2 = $ 400