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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. Requirement General Journal General Ledger Trial Balance Income Statement St Retained Earnings Balance Sheet Impact on income 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 drop-down.) Show less Impact on net income $ (2,400) (5,200) (13,200) Adjusted Account affecting the: Adjusting entry related to: Income statement Balance Sheet a. Insurance insurance expense Prepaid insurance b. Teaching supplies Teaching supplies expense Teaching supplies c. Depreciation - Depreciation expense - Accumulated depreciation - equipment Equipment Equipment Depreciation expense- Accumulated depreciation - d Depreciation - library Professional library Professional library e. Training fees Training fees earned Unearned training fees f Tuition Tuition fees earned Accounts receivable 9. Salaries Salaries expense Salaries payable h. Rent Rent expense Prepaid rent Total impact on income due to adjustments Net income before adjustments Net income after adjustments (7,200) 6,800 123,900 50,000 $ 152,700 0 Adjusted Wells Technical Institute Income Statement For Year Ended December 31, 2019 Revenues Tuition fees earned 131,400 0 7 45,000 $ 176,400 1 Training fees earned Total revenues Expenses Utilities expense Advertising expense Teaching supplies expense Rent expense Insurance expense Salaries expense Depreciation expense - Equipment Depreciation expense - Professional library EEEEE 6,400 6,000 5,200 36,000 2,400 50,400 13,200 7,200 0 0 Total expenses Net income 126,800 49,600 $ Adjusted Wells Technical Institute Trial Balance December 31, 2019 Account Title Debit Credit Cash S 34,000 7.500 2,800 9,600 35,000 17.200 80,000 28,200 26,000 400 7,500 10,000 80.000 Accounts receivable Teaching supplies Prepaid insurance Professional library Accumulated depreciation - Professional library Equipment Accumulated depreciation - Equipment Accounts payable Salaries payable Unearned training fees Common stock Retained earnings Dividends Tuition fees earned Training fees earned Depreciation expense - Professional library Depreciation expense - Equipment Salaries expense Insurance expense Rent expense Teaching supplies expense Advertising expense Utilities expense Total 50,000 131,400 45,000 7,200 13,200 50,400 2,400 36,000 5,200 6,000 6,400 S 345,700 S 345,700 Wells Technical Institute Balance Sheet December 31, 2019 Assets Current assets Cash Accounts receivable Teaching supplies Prepaid insurance 34,000 7,500 2.800 9,600 0 0 $ 53,900 35,000 (17,200) 17,800 Total current assets Plant assets Professional library Accumulated depreciation - Professional library Professional library, net Equipment Accumulated depreciation - Equipment Equipment, net Total plant assets Total assets 80,000 (28,200) 51,800 69,600 123,500 $ Liabilities Current liabilities Accounts payable Salaries payable Unearned training fees 26,000 400 7,500 0 69 $ 33,900 Total liabilities Equity Common stock Retained earnings Total equity Total Liabilities & Equity 10,000 79,600 89,600 123,500 $
