Problem 3-3A (Algo) Preparing adjusting entries, adjusted trial balance, and financial statements LO P1, P2, P3, P4, P5

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[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 Items

1. An analysis of WTI's insurance policies shows that $2,542 of coverage has expired.
2. An inventory count shows that teaching supplies costing $2,204 are available at year-end.
3. Annual depreciation on the equipment is $10,170.
4. Annual depreciation on the professional library is $5,085.
5. On September 1, WTI agreed to do five training courses for a client for $2,600 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 $13,000 cash in advance for all five training courses on September 1, and WTI credited Unearned Revenue.
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, $5,998 of the tuition revenue has been earned by WTI.
7. 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.
8. The balance in the Prepaid Rent account represents rent for December.

WELLS TECHNICAL INSTITUTE
Unadjusted Trial Balance
December 31
	Debit	Credit
Cash	$ 27,849
Accounts receivable	0
Teaching supplies	10,710
Prepaid insurance	16,068
Prepaid rent	2,143
Professional library	32,133
Accumulated depreciationProfessional library		$ 9,641
Equipment	95,000
Accumulated depreciationEquipment		17,139
Accounts payable		23,000
Salaries payable		0
Unearned revenue		13,000
T. Wells, Capital		102,496
T. Wells, Withdrawals	42,845
Tuition revenue		109,254
Training revenue		40,702
Depreciation expenseProfessional library	0
Depreciation expenseEquipment	0
Salaries expense	51,415
Insurance expense	0
Rent expense	23,573
Teaching supplies expense	0
Advertising expense	7,498
Utilities expense	5,998
Totals	$ 315,232	$ 315,232

Problem 3-3A (Algo) Part 1

Required:

1. Prepare the necessary adjusting journal entries for items a through c. Assume that adjusting entries are made only at year-end. a. An inventory count shows that teaching supplies costing $2,204 are available at year-end.

b. On September 1, WTI agreed to do five training courses for a client for $2,600 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 $13,000 cash in advance for all five training courses on September 1, and WTI credited Unearned Revenue.

c. The balance in the Prepaid Rent account represents rent for December.

2-a. Post the balance from the unadjusted trial balance and the adjusting entries into the T-accounts. 2-b. Prepare an adjusted trial balance.

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 $102,496 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.