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. 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 $3,732 of coverage has expired.
2. An inventory count shows that teaching supplies costing $3,235 are available at year-end.
3. Annual depreciation on the equipment is $14,929.
4. Annual depreciation on the professional library is $7,464.
5. 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.
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, $12,100 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	$ 26,340
Accounts receivable	0
Teaching supplies	10,129
Prepaid insurance	15,197
Prepaid rent	2,027
Professional library	30,391
Accumulated depreciation—Professional library		$ 9,119
Equipment	104,000
Accumulated depreciation—Equipment		16,210
Accounts payable		26,000
Salaries payable		0
Unearned revenue		12,500
Common stock		26,640
Retained earnings		80,000
Dividends	40,523
Tuition revenue		103,332
Training revenue		38,496
Depreciation expense—Professional library	0
Depreciation expense—Equipment	0
Salaries expense	48,628
Insurance expense	0
Rent expense	22,297
Teaching supplies expense	0
Advertising expense	7,092
Utilities expense	5,673
Totals	$ 312,297	$ 312,297

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

2. 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.

Answer rating: 100% (QA)

No Date Account a 31Dec Insurance expense Prepaid Insurance Insurance expired b d e f h 31Dec Teachi... View the full answer