3-a. Prepare Wells Technical Institute's income statement for the year 2017. 3-b. Prepare Wells Technical Institute's statement of owner's equity for the year 2017.
3-c. Prepare Wells Technical Institute's balance sheet as of December 31, 2017
[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, 2017, follows. WTI initially records prepaid expenses and unearned revenues in balance sheet accounts. Descriptions of items athrough h that require adjusting entries on December 31, 2017, follow.
Additional Information Items
An analysis of WTI's insurance policies shows that $2,674 of coverage has expired.
An inventory count shows that teaching supplies costing $2,318 are available at year-end 2017.
Annual depreciation on the equipment is $10,698.
Annual depreciation on the professional library is $5,349.
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 $2,800, 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 2018.
On October 15, WTI agreed to teach a four-month class (beginning immediately) for an individual for $2,461 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.)
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.
The balance in the Prepaid Rent account represents rent for December.
WELLS TECHNICAL INSTITUTE
Unadjusted Trial Balance
December 31, 2017
Debit Credit
Cash $ 27,094
Accounts receivable 0
Teaching supplies 10,420
Prepaid insurance 15,632
Prepaid rent 2,085
Professional library 31,262
Accumulated depreciation—Professional library $ 9,380
Equipment 72,935
Accumulated depreciation—Equipment 16,675
Accounts payable 34,976
Salaries payable 0
Unearned training fees 14,000
Common stock 14,000
Retained earnings 52,277
Dividends 41,684
Tuition fees earned 106,293
Training fees earned 39,599
Depreciation expense—Professional library 0
Depreciation expense—Equipment 0
Salaries expense 50,022
Insurance expense 0
Rent expense 22,935
Teaching supplies expense 0
Advertising expense 7,295
Utilities expense 5,836
Totals $ 287,200 $ 287,200