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, 2017, 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, 2017, follow. Additional Information Items a. An analysis of WTI's insurance policies shows that $3,996 of coverage has expired. b. An inventory count shows that teaching supplies costing $3,464 are available at year-end 2017. c. Annual depreciation on the equipment is $15,986. d. Annual depreciation on the professional library is $7,993. 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 2018. f. On October 15, WTI agreed to teach a four-month class (beginning immediately) for an individual for $5,261 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 neremher 31 2017 Prev 1 2 3 of 3 Next > Debit $ 27,094 Credit 10,420 15,632 2,085 31,262 $ 9,380 72,935 WELLS TECHNICAL INSTITUTE Unadjusted Trial Balance December 31, 2017 Cash Accounts receivable Teaching supplies Prepaid insurance Prepaid rent Professional Library Accumulated depreciation-Professional Library Equipment Accumulated depreciation Equipment Accounts payable Salaries payable Unearned training fees T. Wells, Capital T. Wells, Withdrawals 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 Totals 16,675 35,976 13,000 66,277 41,684 106,293 39,599 50,022 0 22,935 7,295 5,836 $ 287,200 $287,200 No Transaction General Journal Debit 1 Credit a. Insurance expense Prepaid insurance 3,996 3,996 2 b. Teaching supplies expense Teaching supplies 6,956 6,956 3 C. Depreciation expense-Equipment Accumulated depreciation-Equipment 15,986 15,986 4 d. 7,993 Depreciation expense Professional library Accumulated depreciation Professional library 7,993 5 e. 5,200 Uneamed training fees Training fees earned 5,200 6 1. 5,261 Accounts receivable Tuition fees earned 5,261 400 7 g Salaries expense t 1 of 3 4 d. Depreciation expense-Professional library Accumulated depreciation Professional library 7,993 7,993 5 e. Uneamed training fees Training fees earned 5,200 Book 5,200 Print 6 t. Accounts receivable Tuition fees earned erences 5,261 5.261 7 Salaries expense Salaries payable 400 400 8 h. Rent expense Prepaid rent 2,085 2,085 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, 2017, 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, 2017, follow. Additional Information Items a. An analysis of WTI's insurance policies shows that $3,996 of coverage has expired. b. An inventory count shows that teaching supplies costing $3,464 are available at year-end 2017. c. Annual depreciation on the equipment is $15,986. d. Annual depreciation on the professional library is $7,993. 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 2018. f. On October 15, WTI agreed to teach a four-month class (beginning immediately) for an individual for $5,261 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 neremher 31 2017 Prev 1 2 3 of 3 Next > Debit $ 27,094 Credit 10,420 15,632 2,085 31,262 $ 9,380 72,935 WELLS TECHNICAL INSTITUTE Unadjusted Trial Balance December 31, 2017 Cash Accounts receivable Teaching supplies Prepaid insurance Prepaid rent Professional Library Accumulated depreciation-Professional Library Equipment Accumulated depreciation Equipment Accounts payable Salaries payable Unearned training fees T. Wells, Capital T. Wells, Withdrawals 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 Totals 16,675 35,976 13,000 66,277 41,684 106,293 39,599 50,022 0 22,935 7,295 5,836 $ 287,200 $287,200 No Transaction General Journal Debit 1 Credit a. Insurance expense Prepaid insurance 3,996 3,996 2 b. Teaching supplies expense Teaching supplies 6,956 6,956 3 C. Depreciation expense-Equipment Accumulated depreciation-Equipment 15,986 15,986 4 d. 7,993 Depreciation expense Professional library Accumulated depreciation Professional library 7,993 5 e. 5,200 Uneamed training fees Training fees earned 5,200 6 1. 5,261 Accounts receivable Tuition fees earned 5,261 400 7 g Salaries expense t 1 of 3 4 d. Depreciation expense-Professional library Accumulated depreciation Professional library 7,993 7,993 5 e. Uneamed training fees Training fees earned 5,200 Book 5,200 Print 6 t. Accounts receivable Tuition fees earned erences 5,261 5.261 7 Salaries expense Salaries payable 400 400 8 h. Rent expense Prepaid rent 2,085 2,085