Problem - 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, 2010, follows. Descriptions of items a through f that require adjusting entries on December 31, 2010, follow.
Additional Information
a. An analysis of the school's insurance policies shows that $2,320 of coverage has expired.
b. A count shows that teaching supplies costing $2,880 are available at year-end 2010.
c. Annual depreciation on the equipment is $13,150.
d. Annual depreciation on the professional library is $7,160.
e. The school's two employees are paid weekly. As of the end of the year, two days' salaries have accrued at the rate of $90 per day for each employee.
f. The balance in the Prepaid Rent account represents rent for December.
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WELLS TECHNICAL INSTITUTE Unadjusted Trial Balance December 31, 2010
|
|
Debit
|
Credit
|
|
Cash
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$33,980
|
|
|
Accounts receivable
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0
|
|
|
Teaching supplies
|
8,070
|
|
|
Prepaid insurance
|
12,870
|
|
|
Prepaid rent
|
2,970
|
|
|
Professional library
|
35,060
|
|
|
Accumulated depreciation-Professional library
|
|
$10,050
|
|
Equipment
|
80,960
|
|
|
Accumulated depreciation-Equipment
|
|
15,070
|
|
Accounts payable
|
|
38,440
|
|
Salaries payable
|
|
0
|
|
T. Wells, Capital
|
|
89,980
|
|
T. Wells, Withdrawals
|
50,290
|
|
|
Tuition fees earned
|
|
124,610
|
|
Training fees earned
|
|
41,710
|
|
Depreciation expense-Professional library
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0
|
|
|
Depreciation expense-Equipment
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0
|
|
|
Salaries expense
|
50,270
|
|
|
Insurance expense
|
0
|
|
|
Rent expense
|
33,040
|
|
|
Teaching supplies expense
|
0
|
|
|
Advertising expense
|
5,970
|
|
|
Utilities expense
|
6,380
|
|
|
Totals
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$319,860
|
$319,860
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Requirements -
Prepare the necessary adjusting journal entries for items a through f and record them in the adjustments column and Compute adjusted account balances and enter the balances in the adjusted trial balance columns.
Prepare Wells Technical Institute's income statement and statement of owner's equity for the year 2010 and prepare its balance sheet as of December 31, 2010. The owner made no additional investments during the year.