GLO302 - Based on Problem 3-3A Wells Technical Institute LO P1, P2, P3, P4, P5, P6 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, is found on the trial balance tab. 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 follow. a. An analysis of WTI's insurance policies shows that $2,400 of coverage has expired. b. An inventory count shows that teaching supplies costing $2,800 are available at year-end. c. Annual depreciation on the equipment is $13,200. d. Annual depreciation on the professional library is $7,200. 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 $2,500, and the client paid the first five months' fees in advance. When the cash was received, the Unearned Training Fees account was credited. 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, $7,500 of the tuition has been earned by WTI. 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. St Retained Requirement General Journal General Ledger Trial Balance Income Statement Balance Sheet Impact on income Earnings General Journal tab - For transactions a-h, review the unadjusted balance and prepare the adjusting entry necessary to correctly report the revenue earned or the expense incurred. After adjusting the accounts, review the financial statements for accuracy. General Ledger tab - Each journal entry is posted automatically to the general ledger. Use the drop-down button to view the unadjusted or adjusted balances. Trial Balance tab - You may view either the unadjusted or adjusted trial balance by choosing from the dropdown box below. Your choice will determine the reported values on the financial statement tabs. Income Statement tab - Use the drop-downs to select the accounts properly included on the income statement. The unadjusted or adjusted balances will appear for each account, based on your selection. Statement of Retained earnings tab - The unadjusted or adjusted balances will appear for each account, based on your selection. Balance Sheet tab - Use the drop-downs to select the accounts properly included on the balance sheet. The unadjusted or adjusted balances will appear for each account, based on your selection. Impact on Income tab - For each adjustment, indicate the income statement and balance sheet account affected, and the impact on net income. If an adjustment caused net income to decrease, enter the amount as a negative value. Net income before adjustments can be found on the income statement tab. (Hint: Select unadjusted on the dropdown.) Requirement General Journal a. An analysis of WTI's insurance policies shows that $2,400 of coverage has expired. b. An inventory count shows that teaching supplies costing $2,800 are available at year-end. c. Annual depreciation on the equipment is $13,200. d. Annual depreciation on the professional library is $7,200. 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 $2,500, and the client paid the first five months' fees in advance. When the cash was received, the Unearned Training Fees account was credited. 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, $7,500 of the tuition has been earned by WTI. 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. Requirement General Journal General Ledger Trial Balance Income Statement St Retained Earnings Balance Sheet Impact on income For transactions a-h, review the unadjusted balance and prepare the adjusting entry necessary to correctly report the revenue earned or the expense incurred. Each adjustment is posted automatically to the general ledger and trial balance as soon as you click "record entry". View transaction list Journal entry worksheet 1 2 3 4 > An analysis of WTI's insurance policies shows that $2,400 of coverage has expired. Note: Enter debits before credits. Date Account Title Debit Credit Dec 31 Requirement General Journal General Ledger Trial Balance Income Statement St Retained Earnings Balance Sheet Impact on income Each journal entry is posted automatically to the general ledger. Use the drop-down button to view the unadjusted or adjusted balances. Unadjusted General Ledger Account Cash Teaching supplies No. Date Debit Credit No. Date Debit Credit Balance Balance 34,000 Dec 31 Dec 31 8,000 Prepaid insurance Prepaid rent No. Date Debit Credit No. Date Debit Credit Balance Balance 12,000 Dec 31 Dec 31 3,000 Professional library Accumulated depreciation - Professional library No. Date Debit Credit No. Date Debit Credit Balance 35,000 Balance 10,000 Dec 31 Dec 31 Equipment No. Date Debit Credit Balance No. Accumulated depreciation - Equipment Date Debit Credit Dec 31 Balance 15,000 Dec 31 80,000 Accounts payable Unearned training fees No. Debit Credit No. Debit Credit Date Dec 31 Balance 26,000 Date Dec 31 Balance 12,500 Common stock Retained earnings No. Date Debit Credit Balance No. Date Debit Credit Balance 80,000 10,000 Dividends Tuition fees earned No. Date Debit Credit No. Date Debit Credit Balance 50,000 Balance 123,900 Dec 31 Training fees earned Salaries expense No. Date Debit Credit Balance No. Date Debit Credit Balance Dec 31 40,000 Dec 31 50,000 Rent expense Advertising expense No. Date Debit Credit Balance No. Date Debit Credit Balance Dec 31 33,000 Dec 31 6,000 Utilities expense No. Date Debit Credit Balance Dec 31 6,400 General Journal Trial Balance > Requirement General Journal General Ledger Trial Balance Income Statement St Retained Earnings Balance Sheet Impact on income You may view either the unadjusted or adjusted trial balance by choosing from the drop-down box below. Your choice will determine the reported values on the financial statement tabs. Unadjusted Wells Technical Institute Trial Balance December 31, 2017 Account Title Debit Credit $ 34,000 8,000 12,000 3,000 35,000 10,000 80,000 15,000 26,000 12,500 Cash Teaching supplies Prepaid insurance Prepaid rent Professional library Accumulated depreciation - Professional library Equipment Accumulated depreciation - Equipment Accounts payable Unearned training fees Common stock Retained earnings Dividends Tuition fees earned Training fees earned Salaries expense Rent expense Advertising expense Utilities expense Total 10,000 80,000 50,000 123,900 40,000 50,000 33,000 6,000 6,400 317,400 $ 317,400 Requirement General Journal General Ledger Trial Balance Income Statement St Retained Earnings Balance Sheet Impact on income The unadjusted or adjusted balances will appear for each account, based on your selection. Unadjusted Wells Technical Institute Statement of Retained Earnings For Year Ended December 31, 2019 Retained earnings, December 31, 2019 Add: Net income 80,000 Less: Dividends (50,000) 80,000 Retained earnings, December 31, 2019