Question

1. An analysis of WTI's insurance policies shows that $3,996 of coverage has expired.
2. An inventory count shows that teaching supplies costing $3,464 are available at year-end 2017.
3. Annual depreciation on the equipment is $15,986.
4. Annual depreciation on the professional library is $7,993.
5. 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 $2,800, 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.
6. On October 15, WTI agreed to teach a four-month class (beginning immediately) for an individual for $5,061 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.)
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.

9. Cash	$	26,340
   Accounts receivable		0
   Teaching supplies		10,129
   Prepaid insurance		15,197
   Prepaid rent		2,027
   Professional library		30,391
   Accumulated depreciation—Professional library				$	9,119
   Equipment		70,903
   Accumulated depreciation—Equipment					16,210
   Accounts payable					33,612
   Salaries payable					0
   Unearned training fees					14,000
   Common stock					14,000
   Retained earnings					50,431
   Dividends		40,523
   Tuition fees earned					103,332
   Training fees earned					38,496
   Depreciation expense—Professional library		0
   Depreciation expense—Equipment		0
   Salaries expense		48,628
   Insurance expense		0
   Rent expense		22,297
   Teaching supplies expense		0
   Advertising expense		7,092
   Utilities expense		5,673
   Totals	$	279,200		$	279,200

10. 3-a. Prepare Wells Technical Institute's income statement for the year 2017.
    3-b. Prepare Wells Technical Institute's statement of owner's equity for the year 2017.
    3-c. Prepare Wells Technical Institute's balance sheet as of December 31, 2017.

Answer 1

	Unadjusted Trial Balance		Adjustments		Adjusted Trial Balance
Account Titles	Debit	Credit	Debit	Credit	Debit	Credit
Cash	$             26,340				$     26,340
Accounts Receivable	$                      -		$          12,653		$     12,653
Teaching Supplies	$             10,129			$         6,665	$       3,464
Prepaid Insurance	$             15,197			$         3,996	$     11,201
Prepaid Rent	$               2,027			$         2,027	$              -
Professional Library	$             30,391				$     30,391
Accumulated Depreciation - Professional Library		$            9,119		$         7,993		$      17,112
Equipment	$             70,903				$     70,903
Accumulated Depreciation - Equipment		$         16,210		$       15,986		$      32,196
Accounts Payable		$         33,612				$      33,612
Salaries Payable		$                   -		$             400		$            400
Unearned training fees		$         14,000	$            5,600			$        8,400
Common Stock		$         14,000				$      14,000
Retained Earnings		$         50,431				$      50,431
Dividend	$             40,523				$     40,523
Tuition fees earned		$       103,332		$       12,653		$    115,985
Training fees earned		$         38,496		$         5,600		$      44,096
Depreciation Expense - Professional Library	$                      -		$            7,993		$       7,993
Depreciation Expense - Equipment	$                      -		$          15,986		$     15,986
Salaries Expense	$             48,628		$                400		$     49,028
Insurance Expense	$                      -		$            3,996		$       3,996
Rent Expense	$             22,297		$            2,027		$     24,324
Teaching Supplies expense	$                      -		$            6,665		$       6,665
Advertising Expense	$               7,092				$       7,092
Utilities Expense	$               5,673				$       5,673
Totals	$          279,200	$       279,200	$          55,320	$       55,320	$ 316,232	$    316,232

3a.

Income Statement
Revenues
Tuition fees earned	$          115,985
Training fees earned	$             44,096
Total Revenues		$       160,081
Expenses
Depreciation Expense - Professional Library	$               7,993
Depreciation Expense - Equipment	$             15,986
Salaries Expense	$             49,028
Insurance Expense	$               3,996
Rent Expense	$             24,324
Teaching Supplies expense	$               6,665
Advertising Expense	$               7,092
Utilities Expense	$               5,673
Total Expenses		$       120,757
Net Income		$         39,324

3b.

Statement of Retained Earnings
Beginning Balance	$             50,431
Add : Net Income	$             39,324
	$             89,755
Less : Dividends	$             40,523
Ending Balance	$             49,232

3c.

Balance Sheet
Assets
Current Assets
Cash	$             26,340
Accounts Receivable	$             12,653
Teaching Supplies	$               3,464
Prepaid Insurance	$             11,201
Prepaid Rent	$                      -
Total Current Assets		$         53,658
Property, Plant and Equipment
Professional Library	$             30,391
Accumulated Depreciation - Professional Library	$           -17,112	$         13,279
Equipment	$             70,903
Accumulated Depreciation - Equipment	$           -32,196	$         38,707
Total Assets		$       105,644
Liabilities
Current Liabilities
Accounts Payable	$             33,612
Salaries Payable	$                   400
Unearned training fees	$               8,400
Total Current Liabilities		$         42,412
Stockholder's Equity
Common Stock	$             14,000
Retained Earnings	$             49,232
Total Stockholder's Equity		$         63,232
Total Liabilities & Stockholder's Equity		$       105,644