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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 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 $3,996 of coverage has expired.
2. An inventory count shows that teaching supplies costing $3,464 are available at year-end.
3. Annual depreciation on the equipment is $15,986.
4. Annual depreciation on the professional library is $7,993.
5. On September 1, WTI agreed to do five courses for a client for $2,300 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 $11,500 cash in advance for all five 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, $13,903 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	$ 27,245
Accounts receivable	0
Teaching supplies	10,478
Prepaid insurance	15,719
Prepaid rent	2,097
Professional library	31,436
Accumulated depreciationProfessional library		$ 9,432
Equipment	96,000
Accumulated depreciationEquipment		16,768
Accounts payable		23,000
Salaries payable		0
Unearned revenue		11,500
Common stock		24,057
Retained earnings		80,000
Dividends	41,916
Tuition revenue		106,885
Training revenue		39,820
Depreciation expenseProfessional library	0
Depreciation expenseEquipment	0
Salaries expense	50,300
Insurance expense	0
Rent expense	23,067
Teaching supplies expense	0
Advertising expense	7,336
Utilities expense	5,868
Totals	$ 311,462	$ 311,462

1. Prepare the necessary adjusting journal entries for items a through h. Assume that adjusting entries are made only at year-end.

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 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.