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For each separate case below, follow the three-step process for adjusting the prepaid asset account at December 31. Step 1: Determine what the current account

For each separate case below, follow the three-step process for adjusting the prepaid asset account at December 31. Step 1: Determine what the current account balance equals. Step 2: Determine what the current account balance should equal. Step 3: Record the December 31 adjusting entry to get from step 1 to step 2. Assume no other adjusting entries are made during the year.

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, 2017, 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, 2017, follow. Additional Information Items

  1. An analysis of WTI's insurance policies shows that $3,996 of coverage has expired.
  2. An inventory count shows that teaching supplies costing $3,464 are available at year-end 2017.
  3. Annual depreciation on the equipment is $15,986.
  4. Annual depreciation on the professional library is $7,993.
  5. 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 $2,400, 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 2018.
  6. On October 15, WTI agreed to teach a four-month class (beginning immediately) for an individual for $5,461 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.)
  7. 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.
  8. The balance in the Prepaid Rent account represents rent for December.

WELLS TECHNICAL INSTITUTE Unadjusted Trial Balance December 31, 2017
Debit Credit
Cash $ 27,396
Accounts receivable 0
Teaching supplies 10,536
Prepaid insurance 15,806
Prepaid rent 2,108
Professional library 31,610
Accumulated depreciationProfessional library $ 9,484
Equipment 73,751
Accumulated depreciationEquipment 16,861
Accounts payable 37,522
Salaries payable 0
Unearned training fees 12,000
Common stock 13,000
Retained earnings 54,016
Dividends 42,149
Tuition fees earned 107,477
Training fees earned 40,040
Depreciation expenseProfessional library 0
Depreciation expenseEquipment 0
Salaries expense 50,579
Insurance expense 0
Rent expense 23,188
Teaching supplies expense 0
Advertising expense 7,376
Utilities expense 5,901
Totals $ 290,400 $ 290,400

3-a. Prepare Wells Technical Institute's income statement for the year 2017. 3-b. Prepare Wells Technical Institute's statement of owner's equity for the year 2017. 3-c. Prepare Wells Technical Institute's balance sheet as of December 31, 2017.

Prepare Wells Technical Institute's income statement for the year 2017.

WELLS TECHNICAL INSTITUTE
Income Statement
For Year Ended December 31, 2017
$0
0

Prepare Wells Technical Institute's statement of owner's equity for the year 2017.

WELLS TECHNICAL INSTITUTE
Statement of Retained Earnings
For Year Ended December 31, 2017
Retained earnings, December 31, 2016
0
Retained earnings, December 31, 2017 $0

  • Req 3C

Prepare Wells Technical Institute's balance sheet as of December 31, 2017.

WELLS TECHNICAL INSTITUTE
Balance Sheet
December 31, 2017
0
0
$0
0
Total equity 0
$0

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