Wells Technical Institute WTI a school owned by Tristana Wel

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 $3,335 of coverage has expired.

An inventory count shows that teaching supplies costing $2,891 are available at year-end 2017.

Annual depreciation on the equipment is $13,342.

Annual depreciation on the professional library is $6,671.

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 $2,500, 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 $4,061 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.

2-a. Post the balance from the unadjusted trial balance and the adjusting entries in to the T-accounts.

2-b. Prepare an adjusted trial balance.

Post the balance from the unadjusted trial balance and the adjusting entries in to the T-accounts.

Prepare Wells Technical Institute\'s income statement for the year 2017.

WELLS TECHNICAL INSTITUTE Unadjusted Trial Balance December 31, 2017
	Debit		Credit
Cash	$	27,396
Accounts receivable		0
Teaching supplies		10,536
Prepaid insurance		15,806
Prepaid rent		2,108
Professional library		31,610
Accumulated depreciation—Professional library				$	9,484
Equipment		73,751
Accumulated depreciation—Equipment					16,861
Accounts payable					37,022
Salaries payable					0
Unearned training fees					12,500
Common stock					12,000
Retained earnings					55,016
Dividends		42,149
Tuition fees earned					107,477
Training fees earned					40,040
Depreciation expense—Professional library		0
Depreciation expense—Equipment		0
Salaries expense		50,579
Insurance expense		0
Rent expense		23,188
Teaching supplies expense		0
Advertising expense		7,376
Utilities expense		5,901
Totals	$	290,400		$	290,400

Solution

Answer a. Journal Entry Date Particulars Dr. Amt. Cr. Amt. 1 Insurance Expenses      3,335.00 Prepaid Insurance      3,335.00 (record the insurance expenses) 2 Teaching Supplies Expense      7,645.00 $10,536 - $2,891 Teaching Supplies      7,645.00 $10,536 - $2,891 (record the teaching supplies expenses) 3 Depreciation Expense - Equipment    13,342.00 Accumulated Dep. - Equipment    13,342.00 (record the depreciation expense- equip.) 4 Depreciation Expense - Professional Library      6,671.00 Accumulated Dep. - Professional Library      6,671.00 (record the dep. expense- professional library) 5 Unearned Training Fees      5,000.00 $2,500 X 2 Month    Training Fees Earned      5,000.00 $2,500 X 2 Month (record the training fees earned) 6 Accounts Receivable    10,152.50 $4,061 X 2.50 Months Tution Fees Earned    10,152.50 $4,061 X 2.50 Months (record the tution fees earned) 7 Salaries Expense          400.00 2 Days X 2 Employees X $100 Salaries Payable          400.00 2 Days X 2 Employees X $100 (record the salaries expense) 8 Rent Expense      2,108.00 Prepaid Rent      2,108.00 (record the rent expense) Answer b. Cash Accounts Receivable Teaching Supplies Bal.    27,396.00 Bal.                   -   Bal.    10,536.00      7,645.00 2 6    10,152.50 End. Bal.    27,396.00 End. Bal.    10,152.50 End. Bal.      2,891.00 Prepaid Insurance Prepaid Rent Professional Liabrary Bal.    15,806.00        3,335.00 1 Bal.      2,108.00      2,108.00 8 Bal.    31,610.00 End. Bal.    12,471.00 End. Bal.                   -   End. Bal.    31,610.00 Accumulated Dep. - Professional Liabrary Equipment Accumulated Dep. - Equipment Bal.        9,484.00 Bal.    73,751.00 Bal.    16,861.00        6,671.00 4    13,342.00 3 End. Bal.      16,155.00 End. Bal.    73,751.00 End. Bal.    30,203.00 Accounts Payable Salaries Payable Unearned Training Fees Bal.      37,022.00 Bal.                   -   Bal.    12,500.00          400.00 7 5      5,000.00 End. Bal.      37,022.00 End. Bal.          400.00 End. Bal.      7,500.00 Common stock Retained Earnings Dividends Bal.      12,000.00 Bal.    55,016.00 Bal.    42,149.00 End. Bal.      12,000.00 End. Bal.    55,016.00 End. Bal.    42,149.00 Tution Fees Earned Training Fees Earned Dep. Expense - Professional Liabrary Bal.    107,477.00 Bal.    40,040.00 Bal.                   -        10,152.50 6      5,000.00 5 4      6,671.00 End. Bal.    117,629.50 End. Bal.    45,040.00 End. Bal.      6,671.00 Dep. Expense - Equipment Salaries Expense Insurance Expense Bal.                   -   Bal.    50,579.00 Bal.                   -   3    13,342.00 7          400.00 1      3,335.00 End. Bal.    13,342.00 End. Bal.    50,979.00 End. Bal.      3,335.00 Rent Expense Teaching Supplies Expense Advertising Expense Bal.    23,188.00 Bal.                   -   Bal.      7,376.00 8      2,108.00 2      7,645.00 End. Bal.    25,296.00 End. Bal.      7,645.00 End. Bal.      7,376.00 Utilities Expense Bal.      5,901.00 End. Bal.      5,901.00 Answer c. Well Technical Institure Adjusted Trial Balance As at Dec 31, 2017 Accounts Title Debits Credits Cash      27,396.00 Accounts Receivable      10,152.50 Teaching Supplies        2,891.00 Prepaid Insurance      12,471.00 Prepaid Rent                     -   Professional Liabrary      31,610.00 Accumulated Dep. - Professional Liabrary      16,155.00 Equipment      73,751.00                     -   Accumulated Dep. - Equipment      30,203.00 Accounts Payable      37,022.00 Salaries Payable            400.00 Unearned Training Fees        7,500.00 Common stock      12,000.00 Retained Earnings      55,016.00 Dividends      42,149.00 Tution Fees Earned    117,629.50 Training Fees Earned      45,040.00 Dep. Expense - Professional Liabrary        6,671.00 Dep. Expense - Equipment      13,342.00 Salaries Expense      50,979.00 Insurance Expense        3,335.00 Rent Expense      25,296.00 Teaching Supplies Expense        7,645.00 Advertising Expense        7,376.00 Utilities Expense        5,901.00 Total    320,965.50    320,965.50                     -   Answer d. Well Technical Institure Income Statement For the Year Ended Dec 31, 2017 Revenue Tution Fees Earned    117,629.50 Training Fees Earned      45,040.00 Total Revenue    162,669.50 Expense Dep. Expense - Professional Liabrary 6671 Dep. Expense - Equipment 13342 Salaries Expense 50979 Insurance Expense 3335 Rent Expense 25296 Teaching Supplies Expense 7645 Advertising Expense 7376 Utilities Expense 5901 Total Expense    120,545.00 Net Income      42,124.50