Reference no: EM131918504

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.

WELLS TECHNICAL INSTITUTE Unadjusted Trial Balance December 31, 2010
	Debit	Credit
Cash	$33,980
Accounts receivable	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	0
Depreciation expense-Equipment	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	$319,860	$319,860

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.