2A. Prepare all February 29 closing entries for WWC. Post to the T-Accounts in requirement 1-b. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

1. Record the entry to close sales revenue , interest revenue, sales returns and allowances, sales discounts.

2. Record the entry to close expenses.

3. Record the entry to close dividends.

Wally's Widget Company (WWC) Incorporated near the end of 2011. Operations began In January of 2012 WWC prepares adjusting entries and financial statements at the end of each month. Balances In the accounts at the end of January are as follows: $ 19,970 Unearned Revenue (40 units) $11,000 Accounts Payable (Jan Rent) Cash Accounts Recelvable Allowance for Doubtful Accounts Inventory (45 units) $ 4,800 $2,200 $14,500 5,900 $5,370 (1,350) Notes Payable $ 3,150 Contributed Capltal Retalned Earnings - Feb 1, 2012 WWC establishes a polilcy that it will sell Inventory at $165 per unit. . In January, WWC recelved a $4,800 advance for 40 units, as reflected In Unearned Revenue WWC's February 1 Inventory balance consisted of 45 units at a total cost of $3150. . wwC's note payable accrues interest at a 12% annual rate WWC will use the FIFO Inventory method and record COGS on a perpetual basis. February Transactions 02/01 Included in WWC's February 1 Accounts Recelvable balance is a $1,500 account due from Kit Kat, a WWC customer. Kit Kat is having cash flow problems and cannot pay Its balance at this time. WWC arranges with Kit Kat to convert the $1,500 balance to a note, and Kit Kat signs a 6-month note, at 10% annual interest. The principal and all interest will be due and payable to WWC on August 1, 2012 02/02 WWC pald a $500 Insurance premium covering the month of February. The amount pald is recorded 02/05 An additional 200 units of Inventory are purchased on account by WWC for $15,000 - terms 2/15, 02/05 WWC pald Federal Express $200 to have the 200 units of Inventory delivered overnight. Delivery 02/10 Sales of 170 units of Inventory occurred during the perlod of 02/07- 02/10. The sales terms are 02/15 directly as an expense n30 occurred on 02/06 2/10, net 30 The 40 units that were pald for In advance and recorded in January are delivered to the customer. 30 units of the Inventory that had been sold on 2/10 are returned to WWC. The units are not damaged and can be resold. Therefore, they are returned to Inventory. Assume the units returned are from the 2/05 purchase 02/15 02/16 WWC pays the first 2 weeks wages to the employees. The total pald is $3,100 02/17 Pald In full the amount owed for the 2/05 purchase of Inventory. WWC records purchase discounts In the current perlod rather than as a reduction of Inventory costs. 02/18 02/19 $4,400 of rent for January and February was pald. Because all of the rent will soon explre, the 02/19 Collected $8,900 of customers' Accounts Recelvable. Of the $8,900, the discount was taken by 02/26 WWC recovered $490 cash from the customer whose account had previously been written off (see 02/27 A $400 utility bill for February arrived. It Is due on March 15 and will be pald then. Wrote off a customer's account In the amount of $1,450. February portion of the payment is charged directly to expense customers on $5,000 of account balances, therefore WWC recelved less than $8,900. 02/18). 02/28 WWC declared and pald a $900 cash dividend. Adjusting Entries: 02/29 Record the $3,100 employee salary that is owed but will be pald March 1 02/29 wwC decides to use the aging method to estimate uncollectible accounts. wwC determines 6% of the ending balance is the appropriate end of February estimate of uncollectible accounts. 02/29 Record February Interest expense accrued on the note payable 02/29 Record one month's Interest earned Kit Kat's note (see 02/01)