Question
Important: 1. In your T ACs make sure to enter the transaction letter next to the monetary value (you have a drop down menu for
Important: 1. In your T ACs make sure to enter the transaction letter next to the monetary value (you have a drop down menu for the transaction letter). This is a graded item & will cost you points. 2. on the B/S when presenting the long lived assets list the Library (and A/D) FIRST and then Equipment (and A/D) SECOND
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
- An analysis of WTI's insurance policies shows that $3,071 of coverage has expired.
- An inventory count shows that teaching supplies costing $2,662 are available at year-end.
- Annual depreciation on the equipment is $12,285.
- Annual depreciation on the professional library is $6,142.
- On September 1, WTI agreed to do five courses for a client for $2,400 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 $12,000 cash in advance for all five courses on September 1, and WTI credited Unearned Revenue.
- 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, $9,100 of the tuition revenue has been earned by WTI.
- 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.
- The balance in the Prepaid Rent account represents rent for December.
1. Prepare the necessary adjusting journal entries for items a through h. Assume that adjusting entries are made only at year-end.
2-a. Post the balance from the unadjusted trial balance and the adjusting entries into the T-accounts. 2-b. Prepare an adjusted trial balance.
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 $81,000 on December 31 of the prior year. 3-c. Prepare Wells Technical Institute's balance sheet as of December 31.
WELLS TECHNICAL INSTITUTE Unadjusted Trial Balance December 31 Credit Debit $ 26,340 0 10,129 15,197 2,027 30,391 $ 9, 119 97,000 Cash Accounts receivable Teaching supplies Prepaid insurance Prepaid rent Professional library Accumulated depreciation-Professional library Equipment Accumulated depreciation-Equipment Accounts payable Salaries payable Unearned revenue Common stock Retained earnings Dividends Tuition revenue Training revenue Depreciation expense-Professional library Depreciation expense-Equipment Salaries expense Insurance expense Rent expense Teaching supplies expense Advertising expense Utilities expense Totals 16,210 23,000 0 12,000 22,140 81,000 40,523 103,332 38,496 0 0 48,628 0 22,297 0 7,092 5,673 $ 305,297 $305,297Step by Step Solution
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