Problem 3-3A (Algo) Preparing adjusting entries, adjusted trial balance, and financial statements LO P1, P2, P3, P4, P5 (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. 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 a. An analysis of WTI's insurance policies shows that $3,600 of coverage has expired. b. An inventory count shows that teaching supplies costing $3,120 are available at year-end. c. Annual depreciation on the equipment is $14,400. d. Annual depreciation on the professional library is $7,200. e. On September 1, WTI agreed to do five courses for a client for $2,600 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 $13,000 cash in advance for all five courses on September 1, and WTI credited Unearned Revenue. 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, $11,200 of the tuition revenue 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 WELLS TECHNICAL INSTITUTE Unadjusted Trial Balance December 31 Credit Cash Debit $ 27,396 0 10,536 15,806 2,108 31,610 $ 9,484 95,000 16,861 nearned Common stock Accounts receivable Teaching supplies Prepaid insurance Prepaid rent Professional library Accumulated depreciation-Professional library Equipment Accumulated depreciation Equipment Accounts payable Salaries payable Unearned revenue Retained earnings Dividends Training revenue Depreciation expense-Professional library Depreciation expense-Equipment Salaries expense Insurance expense Rent expense Teaching supplies expense Advertising expense Utilities expense Totals 26,000 0 13,000 14,787 84,000 42,149 Tuition revenue 107,477 40,040 0 0 50,579 0 u 23,188 0 7,376 5,901 $ 311,649 $311,649 Problem 3-3A (Algo) Part 3 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 $84,000 on December 31 of the prior year. 3-c. Prepare Wells Technical Institute's balance sheet as of December 31. Req Req 3B Req 3C Prepare Wells Technical Institute's income statement for the year. WELLS TECHNICAL INSTITUTE Income Statement For Year Ended December 31 $ 0 0 Req Req 3B Req 3C Prepare Wells Technical Institute's statement of retained earnings for the year. The Retained Earnings account balance was $84,000 on December 31 of the prior year. WELLS TECHNICAL INSTITUTE Statement of Retained Earnings For Year Ended December 31 Retained earnings, December 31 prior year end 0 Retained earnings, December 31 current year end $ 0 Req Req 3B Req 3C Prepare Wells Technical Institute's balance sheet as of December 31. Include all balance sheet accounts, even those with zero balances. WELLS TECHNICAL INSTITUTE Balance Sheet December 31 0 0 $ 0 0 0 $ 0