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Problem 3-3A Preparing adjusting entries, adjusted trial balance, and financial statements LO P1, P2, P3, P4, P5, 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 $3,600 of coverage has expired.
2. An inventory count shows that teaching supplies costing $3,120 are available at year-end.
3. Annual depreciation on the equipment is $14,400.
4. Annual depreciation on the professional library is $7,200.
5. On September 1, WTI agreed to do five courses for a client for $2,500 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 $12,500 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, $11,450 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	$	26,944
Accounts receivable		0
Teaching supplies		10,362
Prepaid insurance		15,545
Prepaid rent		2,073
Professional library		31,088
Accumulated depreciationProfessional library				$	9,328
Equipment		102,000
Accumulated depreciationEquipment					16,582
Accounts payable					22,000
Salaries payable					0
Unearned training fees					12,500
Common stock					34,577
Retained earnings					75,000
Dividends		41,452
Tuition fees earned					105,701
Training fees earned					39,379
Depreciation expenseProfessional library		0
Depreciation expenseEquipment		0
Salaries expense		49,743
Insurance expense		0
Rent expense		22,803
Teaching supplies expense		0
Advertising expense		7,254
Utilities expense		5,803
Totals	$	315,067		$	315,067

Problem 3-3A Part 3

3-a. Prepare Wells Technical Institute's income statement for the year. 3-b. Prepare Wells Technical Institute's statement of retained earnings for the year. The Retained Earnings account balance was $75,000 on December 31 of the prior year. 3-c. Prepare Wells Technical Institute's balance sheet as of December 31.