d Problem 3-3A Preparing adjusting entries, adjusted trial balance, and financial statements P1 P2 P3 P4 P5 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 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 at 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. oyees are paid ne Prepaid Rent account represents rent for December 3 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 Cash Accounts receivablo Teaching supplies Prepaid insurance Prepaid rent Professional library Accumulated depreciation-Professional library Equipment Accumulated depreciation Equipment Accounts payable Salarios payable Unearned revenue T. Wells, Capital I Wolls, Withdrawals Tuition revenue Training revenue Depreciation expense-Professional library Depreciation expense-Equipment Salaries expense Insurance expense Rent expense Teaching supplies expense Advertising expense Utilities expense Totals 15,000 26,000 0 12,500 90,000 50,000 123.900 40,000 0 50,000 0 33,000 0 6.000 6.400 $317.400 $317.400 50,000 Depreciation expense- Professional library Depreciation expense-Equipment Salaries expense Insurance expense Rent expense Teaching supplies expense Advertising expense Utilities expense Totals 33.000 6,000 6,400 $317.400 Required Check (2e) Cr. Training Revenue, $5,000 (2) Cr. Tuition Revenue, $7,500 (3) Adj. trial balance totals, $345,700 (4) Net income, $49,600 1. Prepare T-accounts (representing the ledger) with balances from the unadjusted trial balance. 2. Prepare the necessary adjusting journal entries for items a through h and post them to the T-accounts. Assume that adjusting entries are made only at year- end. 3. Update balances in the T-accounts for the adjusting entries and prepare an adjusted trial balance. 4. Prepare Wells Technical Institute's income statement and statement of owner's equity for the year and prepare its balance sheet as of December 31. 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