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 $3,732 of coverage has expired. b. An inventory count shows that teaching supplies costing $3,235 are available at year-end 2017. C. Annual depreciation on the equipment is $14,929. d. Annual depreciation on the professional library is $7,464. 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 $2,600, 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 $4,740 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 Credit $ Debit 26,189 0 10,071 15, 110 2,015 30, 217 $ 9,066 70,500 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 T. Wells, Capital T. Wells, Withdrawals 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 Totals 16,117 34,340 0 13,000 64,062 40,291 102,740 38,275 ooo 48,350 0 22,165 0 7,051 5,641 $ 277,600 $277,600 Income Statement For Year Ended December 31, 2017 Revenues $ Tuition fees earned Training fees earned 114,590 43,475 Total revenues $ 158,065 Expenses Depreciation expense-Professional library Depreciation expense-Equipment Salaries expense Insurance expense Rent expense Teaching supplies expense Advertising expense Utilities expense 7,464 14,929 48,750 3,732 24,180 6,836 7,051 5,641 Total expenses 118,583 Net income $ 39,482 WELLS TECHNICAL INSTITUTE Statement of Owner's Equity For Year Ended December 31, 2017 T. Wells, Capital, December 31, 2016 Add: Net income 39,482 39,482 Less: Withdrawals by owner 40,291 T. Wells, Capital, December 31, $ -809 2017 WELLS TECHNICAL INSTITUTE Balance Sheet December 31, 2017 Assets $ Cash Accounts receivable Teaching supplies Prepaid insurance 26,189 11,850 3,235 11,378 13,687 Professional library Accumulated depreciationProfessional library Equipment Accumulated depreciationEquipment 30,217 16,530 70,500 31,046 39,454 105,793 $ Liabilities $ Accounts payable Salaries payable Unearned training fees 34,340 400 7,800 42,540 Equity T. Wells, Capital -809 X $ 41,731
