Question

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.

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

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.

Cash Equipment Unadj. Bal. 27,396 Unadj. Bal. 73,751 Adj. Bal. 27,396 Adj. Bal. 73,751 Accounts Receivable Accumulated Depreciation—Equipment Unadj. Bal. 0 Unadj. Bal. 16,861 f Adj. Bal. 0 Adj. Bal. 16,861 Teaching Supplies Accounts Payable Unadj. Bal. Unadj. Bal. Adj. Bal. 0 Adj. Bal. 0 Prepaid Insurance Salaries Payable Unadj. Bal. Unadj. Bal. Adj. Bal. 0 Adj. Bal. 0 Prepaid Rent Unearned Training Fees Unadj. Bal. Unadj. Bal. Adj. Bal. 0 Adj. Bal. 0 Professional Library Common stock Unadj. Bal. Unadj. Bal. Adj. Bal. 0 Adj. Bal. 0 Accumulated Depreciation—Professional Library Retained earnings Unadj. Bal. Unadj. Bal. Adj. Bal. 0 Adj. Bal. 0 Tuition Fees Earned Dividends Unadj. Bal. Unadj. Bal. Adj. Bal. 0 Adj. Bal. 0 Training Fees Earned Rent Expense Unadj. Bal. Unadj. Bal. Adj. Bal. 0 Adj. Bal. 0 Depreciation Expense—Professional Library Teaching Supplies Expense Unadj. Bal. Unadj. Bal. Adj. Bal. 0 Adj. Bal. 0 Depreciation Expense—Equipment Advertising Expense Unadj. Bal. Unadj. Bal. Adj. Bal. 0 Adj. Bal. 0 Salaries Expense Utilities Expense Unadj. Bal. Unadj. Bal. Adj. Bal. 0 Adj. Bal. 0 Insurance Expense Unadj. Bal. Adj. Bal. 0

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

	WELLS TECHNICAL INSTITUTE Income Statement For Year Ended December 31, 2017

Answer 1

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