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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. Its unadjusted trial balance as of December 31, 2018, is found on the trial balance tab. 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 follow.

  1. An analysis of WTIs insurance policies shows that $2,400 of coverage has expired.
  2. An inventory count shows that teaching supplies costing $2,800 are available at year-end.
  3. Annual depreciation on the equipment is $13,200.
  4. Annual depreciation on the professional library is $7,200.
  5. 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.
  6. 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 has been earned by WTI.
  7. WTIs 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.
  8. The balance in the Prepaid Rent account represents rent for December.

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Can you please verify the solutions and help me with the last table (Impact On Income). Thanks.

General Journal tab - For transactions a-h, review the unadjusted balance and prepare the adjusting entry necessary to correctly report the revenue earned or the expense incurred. After adjusting the accounts, review the financial statements for accuracy. General Ledger tab - Each journal entry is posted automatically to the general ledger. Use the drop-down button to view the unadjusted or adjusted balances. Trial Balance tab - You may view either the unadjusted or adjusted trial balance by choosing from the dropdown box below. Your choice will determine the reported values on the financial statement tabs. Income Statement tab - Use the drop-downs to select the accounts properly included on the income statement. The unadjusted or adjusted balances will appear for each account, based on your selection. Statement of Retained earnings tab - The unadjusted or adjusted balances will appear for each account, based on your selection. Balance Sheet tab - Use the drop-downs to select the accounts properly included on the balance sheet. The unadjusted or adjusted balances will appear for each account, based on your selection. Impact on Income tab - For each adjustment, indicate the income statement and balance sheet account affected, and the impact on net income. If an adjustment caused net income to decrease, enter the amount as a negative value. Net income before adjustments can be found on the income statement tab. (Hint: Select unadjusted on the dropdown.) No Date Account Title Debit Credit 1 Dec 31 Insurance expense 2,400 Prepaid insurance 2,400 2 Dec 31 5,200 Teaching supplies expense Teaching supplies 5,200 3 Dec 31 13,200 Depreciation expense - Equipment Accumulated depreciation - Equipment 13,200 4 Dec 31 7,200 Depreciation expense - Professional library Accumulated depreciation - Professional library 7,200 5 Dec 31 5,000 Unearned training fees Training fees earned 5,000 6 Dec 31 Accounts receivable 7,500 Tuition fees earned 7,500 7 Dec 31 400 Salaries expense Salaries payable 400 8 Dec 31 3,000 Rent expense Prepaid rent 3,000 Unadjusted General Ledger Account Cash Teaching supplies Debit Credit No. Date Debit Credit No. Date Balance 34.000 Balance 8,000 Dec 31 Dec 31 Prepaid insurance Prepaid rent No. Date Debit Credit No. Debit Credit Balance 12,000 Date Dec 31 Balance 3,000 Dec 31 Professional library Debit Credit No. Date No. Balance 35,000 Accumulated depreciation - Professional library Date Debit Credit Balance Dec 31 10,000 Dec 31 Equipment No. Debit Credit No. Date Dec 31 Date Balance 80,000 Accumulated depreciation - Equipment Debit Credit Balance Dec 31 15,000 Accounts payable Unearned training fees No. Date Debit Credit No. Debit Credit Balance Balance 26,000 Date Dec 31 Dec 31 12,500 Common stock Retained earnings Debit Credit No. Date Debit Credit No. Date Balance 10,000 Balance 80,000 Dividends Tuition fees earned No. Date Debit Credit No. Date Debit Credit Balance Balance 50,000 Dec 31 123,900 Training fees earned Salaries expense No. Date Debit Credit No. Date Debit Credit Balance 40,000 Balance 50,000 Dec 31 Dec 31 Rent expense Debit Credit Advertising expense Debit Credit No. Date No. Date Balance 33,000 Balance 6,000 Dec 31 Dec 31 Utilities expense No. Date Debit Credit Balance 6,400 Dec 31 Unadjusted Wells Technical Institute Trial Balance December 31, 2017 Account Title Debit Credit $ 34,000 8,000 12,000 3,000 35,000 10,000 80,000 Cash Teaching supplies Prepaid insurance Prepaid rent Professional library Accumulated depreciation - Professional library Equipment Accumulated depreciation - Equipment Accounts payable Unearned training fees Common stock Retained earnings Dividends Tuition fees earned Training fees earned Salaries expense Rent expense Advertising expense Utilities expense Total 15,000 26,000 12,500 10,000 80,000 50,000 123,900 40,000 50,000 33,000 6,000 6,400 317,400 $ $ 317,400 Unadjusted Wells Technical Institute Income Statement For Year Ended December 31, 2019 Revenues Tuition fees earned 123,900 Training fees earned 40,000 0 $ 163,900 tt Total revenues Expenses Salaries expense Rent expense Depreciation expense - Equipment Depreciation expense - Professional library Advertising expense Utilities expense Teaching supplies expense Insurance expense 50,000 33,000 0 0 6,000 6,400 0 0 Oo Total expenses Net income 95,400 68,500 $ Unadjusted Wells Technical Institute Statement of Retained Earnings For Year Ended December 31, 2019 Retained earnings, December 31, 2019 Add: Net income Less: Dividends Retained earnings, December 31, 2019 80,000 68,500 (50,000) 98,500 $ Adjusted Wells Technical Institute Balance Sheet December 31, 2019 Assets Current assets Cash Accounts receivable Teaching supplies Prepaid insurance 34,000 7,500 2,800 9,600 0 0 Total current assets $ 53,900 35,000 (17,200) 17,800 Plant assets Professional library Accumulated depreciation - Professional library Professional library, net Equipment Accumulated depreciation - Equipment Equipment, net Total plant assets Total assets 80,000 (28,200) 51,800 69,600 123,500 $ Liabilities Current liabilities Accounts payable Salaries payable Unearned training fees 26,000 400 7,500 0 $ 33,900 1 10,000 Total liabilities Equity Common stock Retained earnings Total equity Total Liabilities & Equity 79,600 89,600 123,500 $ Impact on net income $ (2,400) (5,200) (13,200) Unadjusted Account affecting the: Adjusting entry related to: Income statement Balance Sheet a. Insurance Insurance expense Prepaid insurance b. Teaching supplies Teaching supplies expense Teaching supplies c. Depreciation - equipment Depreciation expense - Accumulated depreciation - Equipment Equipment Depreciation expense- Accumulated depreciation - d. Depreciation - library Professional library Professional library e. Training fees Training fees earned Unearned training fees f. Tuition Tuition fees earned Accounts receivable g. Salaries Salaries expense Salaries payable h. Rent Rent expense Prepaid rent Total impact on income due to adjustments Net income before adjustments Net income after adjustments (7,200) $ (28,000) 0

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