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, 2015, follows. WTI initially records prepaid expenses and unearned revenues in balance sheet accounts. Descriptions of items a through hthat require adjusting entries on December 31, 2015, follow. Additional Information Items a. An analysis of WTI\'s insurance policies shows that $2,807 of coverage has expired. b. An inventory count shows that teaching supplies costing $2,433 are available at year-end 2015. c. Annual depreciation on the equipment is $11,227 d. Annual depreciation on the professional library is $5,614. 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 2016. On October 15, WTI agreed to teach a four-month class (beginning immediately) for an individual for $2,919 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.) f. g. WTl\'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, 2015 Credit Debit $ 26,340 0 10,129 15,197 2,027 30,391 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 $ 9,119 70,903 16,210 34,612 0 13,000 12,886 51,545 40,523 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 103,332 38,496 0 0 48,628 0 22,297 0 7,092 5,673 Totals $279,200 $279,200

Solution

WELLS TECHNICAL INSTITUTE Unadjusted Trial Balance December 31, 2015 Adjustments Adjusted Debit Credit Debit Credit Debit Credit Cash     26,340        26,340 Accounts receivable            -   7297.5 7297.5 Teaching supplies     10,129         7,696          2,433 Prepaid insurance     15,197 2807        12,390 Prepaid rent       2,027 2027 0 Professional library     30,391        30,391 Accumulated depreciation—Professional library       9,119 5614        14,733 Equipment     70,903        70,903 Accumulated depreciation—Equipment     16,210 11227        27,437 Accounts payable     34,612        34,612 Salaries payable            -   400 400 Unearned training fees     13,000 5200          7,800 Common stock     12,886        12,886 Retained earnings     51,545        51,545 Dividends     40,523        40,523 Tuition fees earned 103,332 7297.5      110,630 Training fees earned     38,496 5200        43,696 Depreciation expense-Professional library            -   5614 5614 Depreciation expense-Equipment            -   11227 11227 Salaries expense     48,628 400        49,028 Insurance expense            -   2807 2807 Rent expense     22,297 2027        24,324 Teaching supplies expense            -   7696 7696 Advertising expense       7,092          7,092 Utilities expense       5,673          5,673 Totals 279,200 279,200 42,269 42,269 303,739 303,739 WELLS TECHNICAL INSTITUTE Income Statement For Year Ended December 31, 2015 Revenues Training fees earned $43,696 Tuition fees earned 110,630 Total revenues 154326 Expenses Depreciation expense—Equipment 11,227 Salaries expense 49,028 Insurance expense 2,807 Rent expense 24,324 Teaching supplies expense 7,696 Utilities expense 5,673 Advertising expense 7,092 Depreciation expense—Professional library 5,614 Total expenses 113461 Net income $40,865 WELLS TECHNICAL INSTITUTE Statement of Retained Earnings For Year Ended December 31, 2015 Retained earnings, December 31, 2014 $51,545 Add: Net income 40,865 92410 Less: Dividends 40,523 Retained earnings, December 31, 2015 51,887 WELLS TECHNICAL INSTITUTE Balance Sheet December 31, 2015 Assets Cash $26,340 Accounts receivable 7,298 Teaching supplies 2,433 Prepaid insurance 12,390 Professional library $30,391 Accumulated depreciation—Professional library -14,733 15658 Equipment 70,903 Accumulated depreciation—Equipment -27,437 43466 Total assets 107585 Liabilities Accounts payable $34,612 Salaries payable 400 Unearned training fees 7,800 Total liabilities 42812 Equity Common stock 12,886 Retained earnings 51,887 Total equity 64773 Total liabilities and equity 107585