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. Its unadjusted trial balance as of December 31, 2018 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, 2018, follow. Additional Information Items a. An analysis of WTI's insurance policies shows that $2,674 of coverage has expired. b. An inventory count shows that teaching supplies costing $2,318 are available at year-end 2018. c. Annual depreciation on the equipment is $10,698. d. Annual depreciation on the professional library is $5,349. 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 $2,900, 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 2019. f. On October 15, WTI agreed to teach a four-month class (beginning immediately for an individual for $2,361 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) g. WTI'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

Answer 1

Income Statement:

WELLS TECHNICAL INSTITUTE
Income Statement
For the year ended Dec 31,2018
Revenues:
Tuition fees earned	$110,582
Training fees earned	$44,296
Total revenues		$154,878
Expenses:
Depreciation expense-Professional library	$5,349
Depreciation expense-Equipment	$10,698
Salaries expense	$49,028
Insurance expense	$2,674
Rent expense	$24,324
Teaching supplies expense	$7,811
Advertising expense	$7,092
Utilities expense	$5,673
Total expenses		$112,649
Net income		$42,229

Statement of retained earnings:

WELLS TECHNICAL INSTITUTE
Statement of retained earnings
For the year ended Dec 31,2018
Retained earnings, Dec 31,2017	$50,431
Add: Net income	$42,229
(Less): Dividends	($40,523)
Retained earnings, Dec 31,2018	$52,137

Balance Sheet:

WELLS TECHNICAL INSTITUTE
Balance Sheet
As of December 31,2018
Assets
Cash		$26,340
Accounts receivable		$7,250
Teaching Supplies		$2,318
Prepaid insurance		$12,523
Prepaid rent		$0
Professional library	$30,391
Accumulated depreciation-Professional library	($14,468)	$15,923
Equipment	$70,903
Accumulated Depreciation-Equipment	($26,908)	$43,995
Total Assets		$108,349
Liabilities
Accounts payable	$33,112
Salaries payable	$400
Unearned training fees	$8,700
Total liabilities		$42,212
Stockholders' equity
Common stock	$14,000
Retained earnings	$52,137
Total stockholders' equity		$66,137
Total liabilities and stockholders' equity		$108,349

Calculations:

WELLS TECHNICAL INSTITUTE
Adjusted Trial Balance
December 31,2018
Account title	Debit	Credit
Cash	$26,340
Accounts receivable	$7,250
Teaching Supplies	$2,318
Prepaid insurance	$12,523
Prepaid rent	$0
Professional library	$30,391
Accumulated depreciation-Professional library		$14,468
Equipment	$70,903
Accumulated Depreciation-Equipment		$26,908
Accounts payable		$33,112
Salaries payable		$400
Unearned training fees		$8,700
Common stock		$14,000
Retained earnings		$50,431
Dividends	$40,523
Tuition fees earned		$110,582
Training fees earned		$44,296
Depreciation expense-Professional library	$5,349
Depreciation expense-Equipment	$10,698
Salaries expense	$49,028
Insurance expense	$2,674
Rent expense	$24,324
Teaching supplies expense	$7,811
Advertising expense	$7,092
Utilities expense	$5,673
Total	$302,897	$302,897