Question

REQ 3A, 3B, 3C

HW Help S. Additional Information Items a. An analysis of WTI's insurance policies shows that $3.468 of coverage has expired. b. An inventory count shows that teaching supplies costing $3,006 are available at year-end. c. Annual depreciation on the equipment is $13,871. d. Annual depreciation on the professional library is $6,936. e. On September 1, WTI agreed to do five 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 courses on September 1, and WTI credited Unearned Training Fees. 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, $10,548 of the tuition 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 WELLS TECHNICAL INSTITUTE Unadjusted Trial Balance December 31 Credit Debit 26,340 Cash Accounts receivable Teaching supplies Prepaid insurance Prepaid rent Professional library Accumulated depreciation Professional library Equipment Accumulated depreciation-Equipment Accounts payable 10,129 15,197 2,027 30,391 9,119 70,983 16,210 34,612 < Prex of 18 Next

Answer 1

3-a)

WELLS TECHNICAL INSTITUTE
Income Statement
For the Year Ended December 31
Revenue:
Tuition fees earned	$113880
Training fees earned	43696
Total revenues		157576
Expenses:
Depreciation expense—Professional library	6936
Depreciation expense—Equipment	13871
Salaries expense	49028
Insurance expense	3468
Rent expense	24324
Teaching supplies expense	7123
Advertising expense	7092
Utilities expense	5673
Total expenses		117515
Net income		$40061

Tuition fees earned= $103332+10548= $113880

Training fees earned= $38496+($2600*2)= $43696

Salary expense= $48628+($100*2*2)= $49028

Rent expense= $22297+2027= $24324

Teaching supplies expense= $0+(10129-3006)= $7123

b.

WELLS TECHNICAL INSTITUTE
Statement of Owner's Equity
For the Year Ended December 31
T.Wells, Capital, December 31 prior year end	$64431
Add: Net income	40061
	104492
Less: Withdrawals	40523
T.Wells, Capital, December 31 current year end	$63969

c.

WELLS TECHNICAL INSTITUTE
Balance Sheet
December 31
ASSETS
Cash		$26340
Accounts receivable		10548
Teaching supplies		3006
Prepaid insurance		11729
Professional library	30391
Less: Accumulated depreciation—Professional library	16055	14336
Equipment	70903
Less: Accumulated depreciation—Equipment	30081	40822
Total assets		$106781
LIABILITIES
Accounts payable		$34612
Salaries payable		400
Unearned training fees		7800
Total liabilities		$42812
EQUITY
T.Wells, Capital		63969
Total liabilities and equity		$106781

Accounts receivable= $0+10548= $10548

Prepaid insurance= $15197-3468= $11729

Accumulated depreciation—Professional library= $9119+6936= $16055

Accumulated depreciation—Equipment= $16210+13871= $30081

Salaries payable= $100*2*2= $400

Unearned training fees= $13000-(2600*2)= $7800