Question
Help Me Check My Work! I can't figure out where I'm going wrong! 1. Feb 1st Included in WWCs February 1 Accounts Receivable balance is
Help Me Check My Work! I can't figure out where I'm going wrong!
1. Feb 1st
Included in WWCs February 1 Accounts Receivable 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 $1,900 balance to a note, and Kit Kat signs a 6-month note, at 12% annual interest. The principal and all interest will be due and payable to WWC on August 1, 2012.
2. Feb 2nd
WWC paid a $700 insurance premium covering the month of February. The amount paid is recorded directly as an expense.
3. Feb 5th
An additional 170 units of inventory are purchased on account by WWC for $12,750 terms 2/15, n30.
4. Feb 6th
WWC paid Federal Express $340 to have the 170 units of inventory delivered overnight. Delivery occurred on 02/06.
5. Feb 10a
Record the sales of 140 units of inventory.
6. Feb 10b
Record the cost of goods sold for 140 units.
7. Feb 15a
Record the unearned revenue for 40 units paid in advance.
8. Feb 15b
Record the cost of goods sold for 40 units.
9. Feb 15c
Record the 15 units of inventory returned
10. Feb 15d
Record the sales return and allowance.
11. Feb 16th
WWC pays the first 2 weeks wages to the employees. The total paid is $2,100.
12. Feb 17th
Paid in full the amount owed for the 2/05 purchase of inventory. WWC records purchase discounts in the current period rather than as a reduction of inventory costs.
13. Feb 18th
Wrote off a customers account in the amount of $1,650.
14. Feb 19a
$5,200 of rent for January and February was paid. Because all of the rent will soon expire, the February portion of the payment is charged directly to expense.
15. Feb 19b
Collected $9,300 of customers Accounts Receivable. Of the $9,300, the discount was taken by customers on $7,000 of account balances; therefore WWC received less than $9,300.
16. Feb 26a
Record the entry to reversal of allowance for doubtful accounts.
17. Feb 26b
Record the entry to recovered $530 cash from the customer.
18. Feb 27th
A $600 utility bill for February arrived. It is due on March 15 and will be paid then.
19. Feb 28th
WWC declared and paid a $750 cash dividend.
20. Feb 29a
Record the $2,100 employee salary that is owed but will be paid March 1.
21. Feb 29b
WWC decides to use the aging method to estimate uncollectible accounts. WWC determines 8% of the ending balance is the appropriate end of February estimate of uncollectible accounts.
22. Feb 29c
Record February interest expense accrued on the note payable.
23. Feb 29d
Record one months interest earned Kit Kats note (see 02/01). To make things VERY easy, here are my answers. Everything in red is WRONG, everything that is green is CORRECT. I only really need help figuring out what's wrong with my answers.
Also, if I could get help with this, I'd appreciate it ALOT!
ally'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 eac h month. Bala nces in the accounts at the end of January are as follows 20,570 Unearned Revenue (40 units) 5.000 Cash 11,600 Accounts Payable (Jan Rent) 2.600 Accounts Receivable Allowance for Doubtful Accounts (1,550) Notes Payable 16.500 4.050 Contributed Capital 6.300 Inventory (45 units) 4,270 Retained Earnings Feb 1, 2012 WWC establishes a policy that it will sell inventory at $150 per unit. In January, WWC received a $5.000 advance for 40 units, as reflected in Unearned Revenue. WWC's February 1 inventory balance consisted of 45 units at a total cost of $4,050 WWC's note payable accrues interest at a 12% annual rate WWC will use the FIF inventory method and record COGS on a perpetual basis February Transactions WWC's February 1 Accounts Receivable balance is a $1,900 account due from Kit Kat, a 02/01 ncluded in customer. Kit Kat is having cash flow problems and cannot pay its balance at this time. WWC arranges with Kit Kat to convert the $1,900 balance to a note, and Kit Kat signs a 6-month note, at 12% annual interest. The principal and a interest will be due and payable to WWC on August 1 2012 02/02 WWC paid a $700 insurance premium covering the month of February. The amount paid is recorded directly as an expense 02/05 An additional 170 units of inventory are purchased on account by WWC for $12,750 -terms 2/15, 02/05 WWC paid Federal Express $340 to have the 170 units of inventory delivered overnight Delivery occurred on 02/06 02/10 Sales of 140 units of inventory occurred during the period of 02/07 02/10. The sales terms are 2/10, net 30 02/15 The 400 units that were paid for in advance and recorded in January are delivered to the customer. 02/15 15 units of the inventory that had been sold on 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 02/16 WWC pays the first 2 weeks wages to the employees. The total paid is $2,100 Pa d in full the amount owed for the 2/05 purchase of inventory WWC records purchase discounts n the current period rather than as a reduction of inventory costs 02/18 Wrote off a customer's account in the amount of $1.650 02/19 $5.200 of rent for January and February was paid. Because all of the rent w soon expire, the February portion of the payment is charged directly to expense. 02/19 Collected $9,300 of customers' Accounts Receivable. Of the $9.300, the discount was taken by customers on $7,000 of account balances; therefore WWC received less than $9.300 overed $530 cash from the customer whose account had previously been written off (see 02/26 WWC reC 02/18 02/27 A $600 utility bill for February arrived. It is due on March 15 and will be paid then 02/28 WWC declared and paid a $750 cash dividend Adjusting Entries 02/29 Record the $2,100 employee salary that is owed but will be paid March 1 02/29 WWC decides to use the aging method to estimate uncollectible accounts. WWC determines 8% 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)Step by Step Solution
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