Problem 3-3A Watson Technical Institute (WT), a school owned by Tom Watson, provides training to individuals who pay tuition directly to the school. WTI also offers training to groups in off-site locations. Its unadjusted Preparing adjusting entries trial balance as of December 31.2011, follows. WTI initially records prepaid expenses and unearned rev- adjusted trial balance, and enues in balance sheet accounts. Descriptions of items a through h that require adjusting entries on financial statements 31.2011. follow. A1 P1 P2 P3 Additional Infomation Items a. An analysis of WTI's insurance policies shows that S3,000 of coverage has expired. mhhe.com/iwildFA6a b. An inventory count shows that teaching supplies costing $2,600 are available at year-end 2011. c. Annual depreciation on the equipment is S12,000. d. Annual depreciation on the professional library is $6,000. e. On November 1, WTI agreed to do a special six-month course (starting immediately) for a client. The contract calls foramonthly fee of S2,200, 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 2012. Chapter 3 Adjusting Accounts and Preparing Anancial Statements f 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.) g. WTI s two employees are paid weekly. As of the end of the year, two days' salaries have accrued at the rate of S100 per day for each employee. h. The balance in the Prepaid Rent account represents rent for December. WATSON TECHNICAL INSTITUTES Unadjusted Tral Balance December 31, 2011 Debit Credit 26,000 Cash Accounts receivable Teaching supples 10,000 Prepaid insurance 15,000 2,000 library 30,000 Accumulated depreciation-Professional library Equipment Accumulated depreciatlon-Equlpment 16,000 Accounts payable Salaries payable Unearned training fees 11,000 Common stock 10.000 Retained earnings 40,000 Tulton fees earned 102,000 Training fees earned Depreciation expense Professional library Depreciation expense-Equlpment Salaries expense 48,000 surance expense Rent expense 22,000 Teaching supplies expense Advertising expense 7,000 Utilities expense 5,600 275,600 275,600 1. Prepare Taccounts (representing the ledger with balances from the unadjusted trial balance. 2. Prepare the necessary adjusting journal entries for items a through hand post them to the Taccounts. Check 2e Cr Training Fees $4.400 Tuition P Assume that adjusting entries are made only at yeaN-end. Earned $7500 Adi. Trial bala 3. Update balances in the Taccounts for the adjusting entries and prepare an adjusted trial balance. totals $301,600 (4) Net 4. Prepare Watson Technical Institute's income statement and statement of retained earnings for the year s38,500 and prepare balance sheet as of December 31, 201