Required information Problem 3-3A Preparing adjusting entries, adjusted trial balance, and financial statements LO P1, P2, P3 [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 a. An analysis of WTI's insurance policies shows that $3,203 of coverage has expired. b. An inventory count shows that teaching supplies costing $2,776 are available at year-end 2017. c. Annual depreciation on the equipment is $12,814 d. Annual depreciation on the professional library is $6,407 e. 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. f. On October 15, WTI agreed to teach a four-month class (beginning immediately) for an individual for $3,800 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 $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, 2017 Debit Credit $26,642 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 10,245 15,371 2,050 30,739 $ 9,223 71,718 16,396 35,659 0 12,500 12,000 53,169 Common stock Retained earnings Dividends 40,988 Tuition fees earned 104,516 38,937 Training fees earned Depreciation expense-Professional library Depreciation expense-Equipment Salaries expense Insurance expense 0 49,186 0 Rent expense 22,550 Teaching supplies expense Advertising expense Utilities expense 0 7,173 5,738 $ 282,400 $282,400 Totals Credit No Transaction General Journal Debit Insurance expense 3,203 1 a. Prepaid insurance 3,203 Teaching supplies expense 2 b. 7,469 Teaching supplies 7,469 Depreciation expense-Equipment 12,814 3 C. Accumulated depreciation-Equipment 12,814 Depreciation expense Professional library 4 d. 6,407 Accumulated depreciation-Professional library 6,407 Unearned training fees 5,000 5 e. Training fees earned 5,000 Accounts receivable 6 f. 9,500 9,500 Tuition fees earned Salaries expense 7 400 Salaries payable 400 Rent expense 8 h. 2,050 Prepaid rent 2.050 2-a. Post the balance from the unadjusted trial balance and the adjusting entries in to the T-accounts. 2-b. Prepare an adjusted trial balance. WELLS TECHNICAL INSTITUTE Adjusted Trial Balance December 31, 2017 Debit Credit 26,642 Cash Accounts receivable 9,500 Teaching supplies 2,776 Prepaid insurance Prepaid rent Professional library 30,739 Accumulated depreciation-Professional library Equipment 71,718 Accumulated depreciation-Equipment Accounts payable 35,659 Salaries payable 400 Unearned training fees 12,000 Common stock Retained earnings Dividends Tuition fees earned Training fees earned Depreciati Depreciation expense Equipment 6,407 expense-Professional library 12,814 Salaries expense Insurance expense 3,203 Rent expense Teaching supplies expense 7,469 7,173 Advertising expense Utilities expense 5,738 $ $ 184,179 48,059 Totals