Problem 3-3A Preparing adjusting entries, adjusted trial balance, and financial statements LO A1, P1, P2, P3

[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. Its unadjusted trial balance as of December 31, 2015, 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, 2015, follow.

Additional Information Items

a.	An analysis of WTI's insurance policies shows that $3,203 of coverage has expired.
b.	An inventory count shows that teaching supplies costing $2,776 are available at year-end 2015.
c.	Annual depreciation on the equipment is $12,814.
d.	Annual depreciation on the professional library is $6,407.
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 $2,600, 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 2016.
f.	On October 15, WTI agreed to teach a four-month class (beginning immediately) for an individual for $3,700 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.)
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, 2015
	Debit		Credit
Cash	$	26,793
Accounts receivable		0
Teaching supplies		10,304
Prepaid insurance		15,458
Prepaid rent		2,062
Professional library		30,913
Accumulated depreciationProfessional library			$	9,275
Equipment		72,119
Accumulated depreciationEquipment				16,489
Accounts payable				35,431
Salaries payable				0
Unearned training fees				13,000
T. Wells, Capital				65,539
T. Wells, Withdrawals		41,220
Tuition fees earned				105,108
Training fees earned				39,158
Depreciation expenseProfessional library		0
Depreciation expenseEquipment		0
Salaries expense		49,464
Insurance expense		0
Rent expense		22,682
Teaching supplies expense		0
Advertising expense		7,214
Utilities expense		5,771
Totals	$	284,000	$	284,000

rev: 05_04_2015_QC_CS-15161

References

Section BreakProblem 3-3A Preparing adjusting entries, adjusted trial balance, and financial statements LO A1, P1, P2, P3

2.

value: 15.00 points

Required information

Problem 3-3A Part 1

Required:
1.	Prepare the necessary adjusting journal entries for items a through h. Assume that adjusting entries are made only at year-end.

References

eBook & Resources

WorksheetProblem 3-3A Part 1

3.

value: 10.00 points

Required information

Problem 3-3A Part 2

2.1	Post the balance from the unadjusted trial balance and the adjusting entries in to the T-accounts.

2.2	Prepare an adjusted trial balance.

rev: 05_04_2015_QC_CS-15161

References

eBook & Resources

WorksheetProblem 3-3A Part 2

4.

value: 10.00 points

Required information

Problem 3-3A Part 3

3.1	Prepare Wells Technical Institute's income statement for the year 2015.

3.2	Prepare Wells Technical Institute's statement of owner's equity for the year 2015.

3.3	Prepare Wells Technical Institute's balance sheet as of December 31, 2015.