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20 Feb
2021

Prepare the income statement for the calendar year 2013

Category:ACADEMICIAN

SOLUTION AT Australian Expert Writers

 
Problem 3-1A Identifying adjusting entries with explanations LO P1
For each of the following entries, enter the letter of the explanation that most closely describes it in the space beside each entry. (You can use letters more than once.)
A.
 To record receipt of unearned revenue.
B.
 To record this period’s earning of prior unearned revenue.
C.
 To record payment of an accrued expense.
D.
 To record receipt of an accrued revenue.
E.
 To record an accrued expense.
F.
 To record an accrued revenue.
G.
 To record this period’s use of a prepaid expense.
H.
 To record payment of a prepaid expense.
I.
 To record this period’s depreciation expense.
Problem 3-3A Preparing adjusting entries, adjusted trial balance, and financial statements LO A1, P1, P2, P3
[The following information applies to the questions displayed below.]
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, 2013, follows. WTI initially records prepaid expenses and unearned revenues in balance sheet accounts. Descriptions of items a through h that require adjusting entries on December 31, 2013, follow.
Additional Information Items
a.
An analysis of WTI’s insurance policies shows that $2,400 of coverage has expired.
b.
An inventory count shows that teaching supplies costing $2,800 are available at year-end 2013.
c.
Annual depreciation on the equipment is $13,200.
d.
Annual depreciation on the professional library is $7,200.
e.
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 2014.
f.
On October 15, WTI agreed to teach a four-month class (beginning immediately) for an individual for $3,000 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.)
g.
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.
h.
The balance in the Prepaid Rent account represents rent for December.
WELLS TECHNICAL INSTITUTEUnadjusted Trial BalanceDecember 31, 2013
  Debit
  Credit
  Cash
$
34,000
  Accounts receivable

  Teaching supplies
8,000
  Prepaid insurance
12,000
  Prepaid rent
3,000
  Professional library
35,000
  Accumulated depreciation—Professional library
$
10,000
  Equipment
80,000
  Accumulated depreciation—Equipment
15,000
  Accounts payable
 26,000
  Salaries payable

  Unearned training fees
12,500
  Common stock
10,000
  Retained earnings
80,000
  Dividends
50,000
  Tuition fees earned
123,900
  Training fees earned
40,000
  Depreciation expense—Professional library

  Depreciation expense—Equipment

  Salaries expense
50,000
  Insurance expense

  Rent expense
33,000
  Teaching supplies expense

  Advertising expense
6,000
  Utilities expense
6,400
  Totals
$
317,400
$
317,400
Problem 3-3A Part 1
1.
Prepare the necessary adjusting journal entries for items a through h.
Problem 3-3A Part 2
2.1
Post the balance from the unadjusted trial balance and the adjusting entries to the T-accounts
2.2
Prepare an adjusted trial balance.
Problem 3-3A Part 3
3.1
Prepare Wells Technical Institute’s income statement for the year 2013.
Problem 3-8A Preparing closing entries, financial statements, and ratios C4 A2 A3 P3 P4
The adjusted trial balance for Tybalt Construction as of December 31, 2013, follows.
TYBALT CONSTRUCTIONAdjusted Trial BalanceDecember 31, 2013
 No.
Account Title
Debit
Credit
101
  Cash
$
5,000
104
  Short-term investments
23,000
126
  Supplies
8,100
128
  Prepaid insurance
7,000
167
  Equipment
40,000
168
  Accumulated depreciation—Equipment
$
20,000
173
  Building
150,000
174
  Accumulated depreciation—Building
50,000
183
  Land
55,000
201
  Accounts payable
16,500
203
  Interest payable
2,500
208
  Rent payable
3,500
210
  Wages payable
2,500
213
  Property taxes payable
900
233
  Unearned professional fees
7,500
251
  Long-term notes payable
67,000
307
  Common stock
5,000
318
  Retained earnings
121,400
319
  Dividends
13,000
401
  Professional fees earned
97,000
406
  Rent earned
14,000
407
  Dividends earned
2,000
409
  Interest earned
2,100
606
  Depreciation expense—Building
11,000
612
  Depreciation expense—Equipment
6,000
623
  Wages expense
32,000
633
  Interest expense
5,100
637
  Insurance expense
10,000
640
  Rent expense
13,400
652
  Supplies expense
7,400
682
  Postage expense
4,200
683
  Property taxes expense
5,000
684
  Repairs expense
8,900
688
  Telephone expense
3,200
690
  Utilities expense
4,600
  Totals
$
411,900
$
411,900
O. Tybalt invested $5,000 cash in the business in exchange for more common stock during year 2013 (the December 31, 2012, credit balance of retained earnings was $121,400). Tybalt Construction is required to make a $7,000 payment on its long-term notes payable during 2014.
Required:
1.1
Prepare the income statement for the calendar year 2013

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