Problem 3-3A Preparing adjusting entries, adjusted trial balance, and financial statements.

Wells Technical Institute (WTI) 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 years end.

c. Annual depreciation on the equipment is $13,200.

d. Annual depreciation on the professional library is $7,200.

e. On September 1st, 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 15th, 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.

h. The Balance in the prepaid rent account represents rent for December.

Required

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 retained earnings for the year and prepare its balance sheet as of December. The retained Earning account balance was $80,000 on December 31 of the prior year.

Wells
				Name
Worksheet
				Wells Technical Institute
				Work Sheet
				For year ended Dec 31
									Balance Sheet &
	Unadjusted			Adjusted			Statement of
	Trial Balance	Adjustments	Trial Balance	Income Statement	Shareholders' Equity
Account Titles	Dr.	Cr	Dr.	Cr	Dr.	Cr	Dr.	Cr	Dr.	Cr
cash	34,000
Accounts receivable	-
teaching supplies	8,000
Prepaid Insurance	12,000
Prepaid Rent	3,000
Professional library	35,000
Accumulated Depreciation-Pro library		10,000
Equipment	80,000
Accumulated Depreciation-Equipment		15,000
Accounts payable		26,000
Salaries payable		-
Unearned training fees		12,500
Common Stock		10,000
Retained earnings		80,000
Dividend	50,000
Tuition fees earned		123,900
Training fees earned		40,000
Depreciation Expense -pro library
Depreciation Expense- Equipment
salaries Expense	50,000
Insurance expense
Rent Expense	33,000
Teaching supplies expense
Advertising expense	6,000
Utilities expense	6,400
	317,400	317,400
Adjusting Entries	DR	CR
						Wells Technical Institute
						Income Statement
						For the Period ended December 31st
						Revenue
						Tuition fees earned
						Training fees earned
						Total Revenue
						Expenses
						Depreciation Expense -pro library
						Depreciation Expense- Equipment
						salaries Expense
						Insurance expense
						Rent Expense
						Teaching supplies expense
						Advertising expense
						Utilities expense
						Total Expenses		-
						Net Income			-
Closing Entries	DR	CR				Wells Technical Institute
						Statement of Retained Earnings
						As at December 2017
						Beginning Retained Earnings
						Add:
						Less:
						Ending Retained Earnings