UV Problem 3-3A (Static) Preparing adjusting entries, adjusted trial balance, and financial statements LO P1, P2, P3, P4, P5 [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 a. An analysis of WTI's insurance policies shows that $2,400 of coverage has expired. b. An inventory count shows that teaching supplies costing $2,800 are available at year-end. c. Annual depreciation on the equipment is $13,200. d. Annual depreciation on the professional library is $7,200. e. On September 1, WTI agreed to do five training 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 training courses on September 1, and WTI credited Unearned Revenue f. On October 15, WTI agreed to teach a four-month class (beginning immediately for an executive with payment due ot the end of the class. At December 31, $7,500 of the tuition revenue 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 Credit Cash Accounts receivable Teaching supplies Donat intrance Debit 5 34.000 0 8.000 TANA WELLS TECHNICAL INSTITUTE Unadjusted Trial Balance December 31 Credit Debit $ 34,000 0 8.000 -12,000 3,000 35,000 $ 10,000 80,000 15,000 26,000 0 12,500 90,000 Cash Accounts receivable Teaching supplies Prepaid insurance Prepaid rent Professional Library Accumulated depreciation Professional library Equipment Accumulated depreciation Equipment Accounts payable Salarios payable Unearned revenue 1. Wells, Capital 1. Wells, Withdrawals Tuition revenue Training revenue Depreciation expense-Professional library Depreciation expense-Equipment Salaries expense Insurance expense Rent expense Teaching supplies expense Advertising expense Utilities expenne Totals 50.000 123.900 40.000 0 0 50,000 33,000 0 6,000 6,400 $ 319,400 $317.400 Problem 3-3A (Static) Part 3 3-a. Prepare Wells Technical Institute's income statement for the year. 3-b. Prepare Wells Technical Institute's statement of owner's equity for the year. The T. Wells, Capital account balance was $90,000 on December 31 of the prior year, and there were no owner investments in the current year. 3-c. Prepare Wells Technical Institute's balance sheet as of December 31 WELLS TECHNICAL INSTITUTE Income Statement For Year Ended December 31 Revendes $ Tuition revenue Tuition revenue 131,400 45,000 $ 176,400 Total revenues Expenses Depreciation expense-Professional library Accumulated depreciation Equipment Salaries expense Insurance expense Rent expense Teaching supplies expense Advertising expense Utilities expense 7,200 13,200 50,400 2,400 36,000 5,200 6,000 6,400 Total expenses Net income 126,800 49,600 $ $9 WELLS TECHNICAL INSTITUTE Statement of Owner's Equity For Year Ended December 31 T. Wells, Capital, December 31, prior year Add: Investments by owner Add: Net income 0 0 0 Less: Withdrawals by owner T. Wells, Capital, December 31, current year WELLS TECHNICAL INSTITUTE Balance Sheet December 31 Assets Depreciation expense-Equipment Accounts receivable Teaching supplies Prepaid insurance Professional library Accumulated depreciation Professional library 0 $ $ 0 Equipment Accumulated depreciation Equipment Total assets Liabilities Accounts payable Salaries payable Unearned revenue 0 Total liabilities Equity T. Wells, Capital $ 0 Total liabilities and equity