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Problem 3-3A Preparing adjusting entries, adjusted trial balance, and financial statements LO P1, P2, P3 Skip to question [The following information applies to the questions

Problem 3-3A Preparing adjusting entries, adjusted trial balance, and financial statements LO P1, P2, P3 Skip to question [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 An analysis of WTI's insurance policies shows that $2,400 of coverage has expired. An inventory count shows that teaching supplies costing $2,800 are available at year-end 2017. Annual depreciation on the equipment is $13,200. Annual depreciation on the professional library is $7,200. 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. The fee for the sixth month will be recorded when it is collected in 2018. On October 15, WTI agreed to teach a four-month class (beginning immediately) for an individual for $3,000 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.) 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. WELLS TECHNICAL INSTITUTE Unadjusted Trial Balance December 31, 2017 Debit Credit Cash $ 34,000 Accounts receivable 0 Teaching supplies 8,000 Prepaid insurance 12,000 Prepaid rent 3,000 Professional library 35,000 Accumulated depreciationProfessional library $ 10,000 Equipment 80,000 Accumulated depreciationEquipment 15,000 Accounts payable 26,000 Salaries payable 0 Unearned training fees 12,500 Common stock 10,000 Retained earnings 80,000 Dividends 50,000 Tuition fees earned 123,900 Training fees earned 40,000 Depreciation expenseProfessional library 0 Depreciation expenseEquipment 0 Salaries expense 50,000 Insurance expense 0 Rent expense 33,000 Teaching supplies expense 0 Advertising expense 6,000 Utilities expense 6,400 Totals $ 317,400 $ 317,400 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.

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