Question

Required information Problem 3-3A Preparing adjusting entries, adjusted trial balance, and financial statements LO P1, P2, P3 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. Its unadjusted trial balance as of December 31, 2018 follows. WTI initially records prepaid expenses and unearned revenues in balance sheet accounts. Descriptions of items through h that require adjusting entries on December 31, 2018, follow. a Additional Information Items a. An analysis of WTI's insurance policies shows that $3,996 of coverage has expired. b. An inventory count shows that teaching supplies costing $3,464 are available at year-end 2018 c. Annual depreciation on the equipment is $15,9886 d. Annual depreciation on the professional library is $7,993. e. On November 1, WTI agreed to do a special six-month course (starting immediately) for a client. The contract calls for a monthly fee of $2,600, and the client paid the first five months' fees in advance. When the cash was received, the Unearned Training Fees account was credited. The fee for the sixth month will be recorded when it is collected in 2019 f. On October 15, WTI agreed to teach a four-month class (beginning immediately) for an individual for $5,261 tuition per month payable at the end of the class. The class started on October 15, but no payment has yet been received. (WTI's accruals are applied to the nearest half-month; for example, October recognizes one-half month accrual.) 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, 2018 Debit Credit Cash 26,491 Accounts receivable Teaching supplies Prepaid insurance Prepaid rent Professional library 10,187 15,284 2,039 30,565 Accumulated depreciation-Professional library Equipment Accumulated depreciation-Equipment Accounts payable Salaries payable Unearned training fees Common stock Retained earnings, December 31, 2017 9,171 71,305 16,303 34,885 13,000 15,000 49,800 Dividends 40,755 Tuition fees earned 103,924 Training fees earned Depreciation expense-Professional library Depreciation expense-Equipment Salaries expense 38,717 48,907 Insurance expense Rent expense Teaching supplies expense Advertising expense Utilities expense 22,429 7,132 5,706 $280,800 $280,800 Totals Cash Equipment Unadj. Bal Unadj. Bal Adj. Bal. Adj. Bal Accumulated Depreciation-Equipment Accounts Receivable Unadj. Bal Unadj. Bal Adj. Bal Adj. Bal Accounts Payable Teaching Supplies Unadj. Bal. Unadj. Bal Adj. Bal Adj. Bal Salaries Payable Prepaid Insurance Unadj. Bal Unadj. Bal Adj. Bal 0 Adj. Bal 0 Unearned Training Fees Prepaid Rent Unadj. Bal. Unadj. Bal Adj. Bal Adj. Bal 0 Professional Library Common stock Unadj. Bal Unadj. Bal Adj. Bal 0 Adj. Bal 0 n-. Retained earnings Accumulated Depreciation-Professional Library Unadj. Bal Unadj. Bal Adj. Bal 0 Adj. Bal 0 Dividends Tuition Fees Earned Unadj. Bal Unadj. Bal Adj. Bal Adj. Bal Training Fees Earned Rent Expense Unadj. Bal Unadj. Bal. Adj. Bal 0 Adj. Bal Depreciation Expense-Professional Library Teaching Supplies Expense Unadj. Bal. Unadj. Bal. Adj. Bal. 0 Adj. Bal 0 Depreciation Expense-Equipment Advertising Expense Unadj. Bal Unadj. Bal. Adj. Bal Adj. Bal 0 Salaries Expense Utilities Expense Unadj. Bal Unadj. Bal Adj. Bal 0 Adj. Bal. 0 Insurance Expense Unadj. Bal Insurance Expense Unadj. Bal. Adj. Bal 0 WELLS TECHNICAL INSTITUTE Adjusted Trial Balance December 31, 2018 Debit Credit Cash Accounts receivable Teaching supplies Prepaid insurance Prepaid rent Professional library Accumulated depreciation-Professional library Equipment Accumulated depreciation-Equipment Accounts payable Salaries payable Unearned training fees Common stock Retained earnings Dividends Tuition fees earned Tsoining fooocarmod. Accumulated depreciation-Equipment Accounts payable Salaries payable Unearned training fees Common stock Retained earnings Dividends Tuition fees earned Training fees earned Depreciation expense-Professional library Depreciation expense-Equipment Salaries expense Insurance expense Rent expense Teaching supplies expense Advertising expense Utilities expense Totals 0 O Income Statement For Year Ended December 31, 2018 WELLS TECHNICAL INSTITUTE Statement of Retained Earnings For Year Ended December 31, 2018 Retained earnings, December 31, 2017 Retained earnings, December 31, 2018 $ 0 Balance Sheet December 31, 2018 0 0

Answer 1

Q1 General Journal Debit Credit Transaction Insurance expense 3,996 a. Prepaid insurance 3,996 Teaching supplies expene b. 6,723 Teaching supplies 6,723 (8000-2800) 15,986 Depreciation expense-Equipment C. Accumulated depreciation-Equipment 15,986 d. Depreciation expense-Professional library 7,993 Accumulated depreciation-Professional library 7,993 Une arned training fees 5,200 e. Training fees earned 5,200 (2600*2) f. Accounts receivable 13,153 Tuition fees earned 13,153 (5261*2.5) Salaries expense 400 g. Salaries payable 400 (100*2*2) h. 2,039 Rent expense Prepaid rent 2,039

Cash Equipment Unadj. Bal 26,491 Un adj. Bal 71,305 Adj. Bal Adj. Bal 71,305 26,491 Accumulated Depreciation-Equipment Accounts Receivable Unadj. Bal Unadj. Bal C 16,303 13,153 f 15,986 C Adj. Bal. Adj. Bal 13,153 32,289 Accounts Payable Te aching Supplies 10,187 Unadj. Bal. Unadj. Bal C 34,885 6,723 b 3,464 Adj. Bal. Adj. Bal 34,885 Sal aries Payable Prepaid Insurance Unadj. Bal. 15,284 Unadj. Bal 3,996 400 a 11,288 |Adj. Bal. Adj. Bal 400 Une arned Training Fees Prepaid Rent Unadj. Bal Unadj. Bal. 2,039 13,000 h 2,039 5,200 e 7,800 Adj. Bal. Adj. Bal C C

Retained eaming Professional Library common stock Unadj. Bal. 30,565 Unadj. Bal. 15.000 49,800 Unadj. Bal. Adj. Bal Adj. Bal Adj. Bal. 30,565 15.000 49,800 Accumulated Depreciation- Professional Library Unadj. Bal Dividends Unadi, Bal. 9,171 40,755 7,993 Adj. Bal Adj. Bal. 17,164 40.755 Tuition Fees Earned Insurance Expense Unadj. Bal Unadj. Bal. 103,924 3 996 13.153 a Adj. Bal. Adj. Bal. 117,077 3,996 Training Fees Earned Rent Expense Unadj. Bal. Unadj. Bal. 38,717 22,429 0 0e 5.200 2,039 Adj. Bal. 43,917 Adi. Bal. 24,468

Teaching Supplies Expense Depreciation Expense-Professional Library Unadj. Bal Un adj. Bal 0 0 7,993 6,723 Adj. Bal. 7,993 Adj. Bal 6,723 De preciation Expense-Equipment Advertising Expense Unadj. Bal Un adj. Bal 0 7,132 15,986 C Adj. Bal. |Adj. Bal. 15,986 7,132 Salaries Expen se Utilities Expense 48,907 400 Un adj. Bal Unadj. Bal 5,706 49,307 Adj. Bal. Adj. Bal 5,706

Statement of retained earnine Adjusted Trial Balance Income Statement December 31, 2018 For Year Ended December 31, 2018: For Year Ended December 31, 2018 Revenues Debit Retained earning, December 31, 2016 49.800 Credit 39,683 2649 Cash Training fees earned Add: Net income 43,917 Accounts receivable Tuition fees earned 13.153 117,077 89483 Teaching supplies |40,755 Retained earning, December 31, 2018 48,728 Less: Dividends 3.464 Prepaid insurance Total revenues 160,994 11,288 Prepaid rent Professional library Expenses Depreciation expense-Equipment 30.565 15,986 Accumulated depreciation-Professional library Salaries expense 17,164 49.307 Equipment Accumulated depreciation-Equipment Accounts payable Salaries payable Unearned training fees 71.305 Insurance expense 3,996 32,289 Rent expense 24,468 4,885 Teaching supplies expense 6,723 Utilities expense 400 5,706 Advertising expense 7.800 7,132 common stock 7,993 15.000 Depreciation expense-Professional library Retained earing Dividends Tuition fees earned 49.800 40.755 Total expenses 117,077 121.311 Training fees earned 43.917 Net income 39,683 Depreciation expense-Professional library 7,993 Depreciation expense-Equipment Salaries expense 15,986 49,307 Insurance expense 3,996 Rent expense 24,468 Teaching supplies expense Advertising expense Utilities expense 6,723 7,132 5,706 Totals 318332 318332 Sheet58 Sheet59 Sheet60 Sheet61 Sheet62 Sheet63 Sheet64 Sheet65 Sheet66 Sheets7

Balance Sheet December 31, 2018 Assets Cash 26491 Accounts receivable 13,153 Teaching supplies 3,464 Prepaid insurance 11,288 Professional library Accumulated depreciation-Professional library Equipment Accumulated depreciation-Equipment 30,565 -17,164 13401 71.305 -32,289 39016 Total assets 106813 Liabilities Accounts payable З4 885 Salaries payable Unearned training fees 40C 7,800 Total liabilities 43085 Equity common stock 15,000 Retained earning 48,728 Total equity 63,728 Total liabilities and equity 106.813 Sheet57 Sheet58 Sheet59 Sheet61 Sheet62 Sheet63 Sheet64 Sheet65 Sheet66 Sheet60