Question

Problem 3-3A Preparing adjusting entries, adjusted trial balance, and financial statements LO P1, P2, P3, P4, P5, P6 [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 a. An analysis of WTI's insurance policies shows that $3,864 of coverage has expired. b. An inventory count shows that teaching supplies costing $3,349 are available at year-end. C. Annual depreciation on the equipment is $15,458. d. Annual depreciation on the professional library is $7,729. e. On September 1, WTI agreed to do five courses for a client for $2,200 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 $11,000 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, $13,500 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.

Income Statement is Incorrect -- Need help - Thank you !

:(

Answer 1

Please hit LIKE button if this helped. For any further explanation, please put your query in comment, will get back to you. Adjusting Entries: Date Account Debit Credit a $ 3,864 a. Insurance Expense Prepaid Insurance (insurance expired for the period) $ 3,864 b $ 7,535 b Teaching Supplies Expense Teaching Supplies (being teaching supplies usage recorded) $10,884-$3,349 $ 7,535 с 15,458 с Depreciation Expense Accumulated Depreciation- Equipment (being depreciation recorded) $ 15,458 d $ 7,729 d Depreciation Expense Accumulated Depreciation - Professional Liabrary (being depreciation recorded) $ 7,729 e $ 4,400 e Unearned Training Fee Training Fee Earned (training fees earned recorded) $2,200*2 $ 4,400 13,500 f f Accounts Receivable Tution Fee Earned (training fees earned recorded) $ 13,500 $ 400 g Salaries Expense Salaries Payable (accrued salaries recorded) $100*2 Employee *2 Days $ 400 $ 2,178 h h Rent Expense Prepaid Rent (being rent expense recorded) $ 2,178

Requirement 3a Income Statement $ $ 124,530 45,764 $ 170,294 Tuition fees earned Training fees earned Total Revenue Less: Expenses Depreciation expense- Professional library Depreciation expense-Equipment Salaries expense Insurance expense Rent expense Teaching supplies expense Advertising expense Utilities expense Total Expense $ $ $ $ 7,729 15,458 52,651 3,864 26,136 7,535 7,620 6,096 $ $ $ $ $ $ -127,089 43,205 Net Income