Question

IS 1 Surved Help Required information Problem 3-3A Preparing adjusting entries, adjusted trial balance, and financial statements LO P1, P2, P3, P4, 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 WTl'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 year-end. c. Annual depreciation on the equipment is $13,200. d. Annual depreciation on the professional library is $7,200. e. On September 1, WTI agreed to do five 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 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, $7,500 of the tuition has been earned by WTI.

Answer 1

Income Statement
Revenues:
Tuition fees earned				$ 1,31,400.00
Training fees earned				$    45,000.00
Total Revenue					$ 1,76,400.00
Expenses:
Depreciation expense-Professional library				$       7,200.00
Depreciation expense-Equipment				$    13,200.00
Salaries expense				$    50,400.00
Insurance expense				$       2,400.00
Rent expense				$    36,000.00
Teaching supplies expense				$       5,200.00
Advertising expense				$       6,000.00
Utilities expense				$       6,400.00
Total Expenses					$ 1,26,800.00
Net Income					$    49,600.00

	Statement of Owner's Equity
	T.Wells, Capital, December 31, prior year end					$    90,000.00
Add:	Net Income					$    49,600.00
						$ 1,39,600.00
Less:	T. Wells, Withdrawals					$    50,000.00
	T.Wells, Capital, December 31, current year end					$    89,600.00

Balance Sheet
Assets:
Cash					$    34,000.00
Accounts receivable					$       7,500.00
Teaching supplies					$       2,800.00
Prepaid insurance					$       9,600.00
Professional library				$    35,000.00
Accumulated depreciation Professional library				$    17,200.00	$    17,800.00
Equipment				$    80,000.00
Accumulated depreciation Equipment				$    28,200.00	$    51,800.00
Total Assets					$ 1,23,500.00
Liabilities:
Accounts payable					$    26,000.00
Salaries payable					$          400.00
Unearned training fees					$       7,500.00
Total Liabilities					$    33,900.00
Owner's Equity:
T.Wells, Capital, December 31					$    89,600.00
Total Liabilities and Owner's Equity					$ 1,23,500.00