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 $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 WTL
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 , 2013
Debit Credit
Cash 26642
Accounts receivable 0
Teaching supplies 10245
Prepaid insurance 15371
Prepaid rent 2050
Professional library 30739
Accumulated depreciation- Professional library 9223
Equipment 71716
Accumulated depreciation-Equipment 16396
Accounts payable 33659
Salaries payable 0
Unearned training fees 14500
T. Wells, Capital 65169
T. Wells, withdrawals 40988
Tuition fees earned 104516
Training fees earned 38937
Depreciation expense-Professional libra 0
Depreciation expense-Equipment 0
Salaries expense 49186
Insurance expense 0
Rent expense 22552
Teaching supplies expense 0
Advertising expense 7173
Utilities expense 5738
Totals 282400 282400
a. Prepare Wells Technical Institute's income statement for the year.
b. Prepare Wells Technical Institute's statement of owner's equity for the year. The T. Wells, Capital account balance was $90,000 on December 31 of the prior year.
c. Prepare Wells Technical Institute's balance sheet as of December 31.