Required information Problem 3-3A Preparing adjusting entries, adjusted trial balance, and financial statements LO P1, P2, P3, P4, P5, P6 [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 a. An analysis of WTI's insurance policies shows that $3,732 of coverage has expired. b. An inventory count shows that teaching supplies costing $3,235 are available at year-end. c. Annual depreciation on the equipment is $14,929. d. Annual depreciation on the professional library is $7,464. e. On September 1, WTI agreed to do five courses for a client for $2,400 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 $12,000 cash in advance for all five courses on September 1, and WTI credited Unearned Training Fees. f. 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, $12,350 of the tuition has been earned by WTI 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 December 31 Debit Credit $28,000 Cash Accounts receivable 0 Teaching supplies Prepaid insurance Prepaid rent Professional library Accumulated depreciation-Professional library Equipment Accumulated depreciation-Equipment Accounts payable Salaries payable Unearned training fees 10,768 16,155 2,155 32,307 $ 9,693 100,000 17,232 22,000 12,000 29,738 80,000 Common stock Retained earnings Dividends 43,078 Tuition fees earned 109,846 40,923 Training fees earned Depreciation expense-Professional library Depreciation expense-Equipment Salaries expense 0 51,694 Insurance expense 0 Rent expense 23,705 Teaching supplies expense Advertising expense Utilities 0 7,539 6,031 expense $321,432 $321,432 Totals O O 1. Prepare the necessary adjusting journal entries for items a through h. Assume that adjusting entries are made only at year-end. Answer is complete and correct. No General Journal Credit Transaction Debit 1 Insurance expense 3,732 . Prepaid insurance 3,732 Teaching supplies expense 2 b. 7,533 Teaching supplies 7,533 Depreciation expense-Equipment 14,929 C. 14,929 Accumulated depreciation-Equipment 7,464 Depreciation expense-Professional library 4 d. Accumulated depreciation-Professional library 7,464 Unearned training fees 5 4,800 . Training fees earned 4,800 6 f. Accounts receivable 12,350 12,350 Tuition fees earned 400 Salaries expense 7 Salaries payable 400 Rent expense 8 h. 2,155 Prepaid rent 2,155 Req 2A Req 2B Post the balance from the unadjusted trial balance and the adjusting entries in to the T-accounts. Cash Equipment 28,000 Unadj. Bal. Unadj. Bal. a Adj. Bal. 28,000 Adj. Bal. 0 Accumulated Depreciation-Equipment Accounts Receivable Unadj. Bal. Unadj. Bal Adj. Bal. Adj. Bal. 0 Teaching Supplies Accounts Payable Unadj. Bal Unadj. Bal. Adj. Bal 0 Adj. Bal. 0 Salaries Payable Prepaid Insurance Unadj. Bal. Unadj. Bal. Adj. Bal 0 Adj. Bal. 0 Unearned Training Fees Prepaid Rent Unadj. Bal Unadj. Bal. Adj. Bal Adj. Bal 0 Professional Library Common stock Unadj. Bal. Unadj. Bal. Adj. Bal Adj. Bal. Retained earnings Accumulated Depreciation-Professional Library Unadj. Bal. Unadj. Bal Adj. Bal Adj. Bal Tuition Fees Earned Dividends Unadj. Bal. Unadj. Bal Adj. Bal 0 Adj. Bal. Training Fees Earned Rent Expense Unadj. Bal Unadj. Bal. Adj. Bal 0 Adj. Bal 0 Depreciation Expense-Professional Library Teaching Supplies Expense Unadj. Bal Unadj. Bal. Adj. Bal. 0 0 Adj. Bal. Advertising Expense Depreciation Expense-Equipment Unadj. Bal. Unadj. Bal Adj. Bal 0 Adj. Bal 0 Utilities Expense Salaries Expense Unadj. Bal Unadj. Bal. Adj. Bal 0 Adj. Bal. Insurance Expense Unadj. Bal. Adj. Bal. WELLS TECHNICAL INSTITUTE Adjusted Trial Balance December 31 Debit Credit 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 Common stock Retained earnings Dividends 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 Req 3A Req 3B Req 3C Prepare Wells Technical Institute's income statement for the year. WELLS TECHNICAL INSTITUTE Income Statement For Year Ended December 31 0 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 $80,000 on December 31 of the prior year. 3-c. Prepare Wells Technical Institute's balance sheet as of December 31. Complete this question by entering your answers in the tabs below. Req 3B Req 3C Req 3A Prepare Wells Technical Institute's statement of retained earnings for the year. The Retained Earnings account balance was $80,000 on December 31 of the prior year. WELLS TECHNICAL INSTITUTE Statement of Retained Earnings For Year Ended December 31 Retained earnings, December 31 prior year end 0 Retained earnings, December 31 current year end