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Problem 3-3A Preparing adjusting entries, adjusted trial balance, and financial statements LO P1, P2, P3, P4, P6 Skip to question [The following information applies to

Problem 3-3A Preparing adjusting entries, adjusted trial balance, and financial statements LO P1, P2, P3, P4, P6

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[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

  1. An analysis of WTI's insurance policies shows that $2,674 of coverage has expired.
  2. An inventory count shows that teaching supplies costing $2,318 are available at year-end.
  3. Annual depreciation on the equipment is $10,698.
  4. Annual depreciation on the professional library is $5,349.
  5. On September 1, WTI agreed to do five courses for a client for $2,300 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 $11,500 cash in advance for all five courses on September 1, and WTI credited Unearned Training Fees.
  6. 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, $7,403 of the tuition has been earned by WTI.
  7. 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.
  8. The balance in the Prepaid Rent account represents rent for December.
WELLS TECHNICAL INSTITUTE Unadjusted Trial Balance December 31
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 36,931
Salaries payable 0
Unearned training fees 11,500
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

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