Question
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
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
- An analysis of WTI's insurance policies shows that $2,400 of coverage has expired.
- An inventory count shows that teaching supplies costing $2,800 are available at year-end.
- Annual depreciation on the equipment is $13,200.
- Annual depreciation on the professional library is $7,200.
- 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.
- 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, $7,500 of the tuition revenue has been earned by WTI.
- 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.
- The balance in the Prepaid Rent account represents rent for December.
WELLS TECHNICAL INSTITUTE Unadjusted Trial Balance December 31 | |||||||||
Debit | Credit | ||||||||
Cash | $ | 34,000 | |||||||
Accounts receivable | 0 | ||||||||
Teaching supplies | 8,000 | ||||||||
Prepaid insurance | 12,000 | ||||||||
Prepaid rent | 3,000 | ||||||||
Professional library | 35,000 | ||||||||
Accumulated depreciationProfessional library | $ | 10,000 | |||||||
Equipment | 80,000 | ||||||||
Accumulated depreciationEquipment | 15,000 | ||||||||
Accounts payable | 26,000 | ||||||||
Salaries payable | 0 | ||||||||
Unearned revenue | 12,500 | ||||||||
Common stock | 10,000 | ||||||||
Retained earnings | 80,000 | ||||||||
Dividends | 50,000 | ||||||||
Tuition revenue | 123,900 | ||||||||
Training revenue | 40,000 | ||||||||
Depreciation expenseProfessional library | 0 | ||||||||
Depreciation expenseEquipment | 0 | ||||||||
Salaries expense | 50,000 | ||||||||
Insurance expense | 0 | ||||||||
Rent expense | 33,000 | ||||||||
Teaching supplies expense | 0 | ||||||||
Advertising expense | 6,000 | ||||||||
Utilities expense | 6,400 | ||||||||
Totals | $ | 317,400 | $ | 317,400 | |||||
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.
Prepare Wells Technical Institute's income statement for the year. WELLS TECHNICAL INSTITUTE Income Statement For Year Ended December 31 $ 0 0 $ 0 0 Req Req 3B Req 3C 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 $ 0Step by Step Solution
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