Question

1. An analysis of WTI's insurance policies shows that $3,203 of coverage has expired.
2. An inventory count shows that teaching supplies costing $2,776 are available at year-end.
3. Annual depreciation on the equipment is $12,814.
4. Annual depreciation on the professional library is $6,407.
5. 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.
6. 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, $9,500 of the tuition has been earned by WTI.
7. 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.
8. The balance in the Prepaid Rent account represents rent for December.

WELLS TECHNICAL INSTITUTE Unadjusted Trial Balance December 31
	Debit			Credit
Cash	$	27,849
Accounts receivable		0
Teaching supplies		10,710
Prepaid insurance		16,068
Prepaid rent		2,143
Professional library		32,133
Accumulated depreciation—Professional library				$	9,641
Equipment		96,000
Accumulated depreciation—Equipment					17,139
Accounts payable					23,000
Salaries payable					0
Unearned training fees					12,500
Common stock					24,996
Retained earnings					79,000
Dividends		42,845
Tuition fees earned					109,254
Training fees earned					40,702
Depreciation expense—Professional library		0
Depreciation expense—Equipment		0
Salaries expense		51,415
Insurance expense		0
Rent expense		23,573
Teaching supplies expense		0
Advertising expense		7,498
Utilities expense		5,998
Totals	$	316,232		$	316,232

3-a. Prepare Wells Technical Institute's income statement for the year.
3-b. Prepare Wells Technical Institute's statement of retained earnings for the year. The Retained Earnings account balance was $79,000 on December 31 of the prior year.
3-c. Prepare Wells Technical Institute's balance sheet as of December 31.
  

Answer 1

3-a.	Income Statement
	For the year ended December 31		Amount $
	Revenue
	Tuition Fees earned (109254+9500)	118,754
	Training Fees earned (40702+(2500*2))	45,702
	Total Revenue		164,456
	Expenses
	Salaries expense (51415+(2*2*100))	51,815
	Rent Expense (23573+2143)	25,716
	Insurance expense	3,203
	Teaching Supplies expense(10710-2776)	7,934
	Depreciation expense—Professional library	6,407
	Depreciation expense—Equipment	12,814
	Advertising Expense	7,498
	Utilties Expense	5,998
	Total Expense		121,385
	Net Income		43,071
3-b	Statement of retained earnings
	For the year ended December 31	Amount $
	Beginning Balance	79,000
	Add: Net Income	43,071
		122,071
	Less: Dividend	42,845
	Ending Balance	79,226
3-c	Balance Sheet
	As at December 31		Amount $
	Assets
	Current Assets
	Cash	27,849
	Accounts Receivable	9,500
	Teaching Supplies	2,776
	Prepaid Insurance (16068-3203)	12,865
	Total Current Assets		52,990
	Property , Plant & Equipment
	Professional Liabrary	32,133
	Less: Accumulated Depreciation (9641+6407)	16,048	16,085
	Equipment	96,000
	Less: Accumulated Depreciation(17139+12814)	29,953	66,047
	Total Assets		135,122
	Liabilities & Owner's Equity
	Liabilities
	Salaries Payable(2*100*2)	400
	Accounts Payable	23,000
	Unearned training fees (12500-5000)	7,500
	Total Liabilities		30,900
	Stockholder's Equity
	Common Stock		24,996
	Retained earnings		79,226
	Total Liabilities & Owner's Equity		135,122
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