How to fix fix the statements and balance sheet?
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: Cash $20,120 Unearned Revenue (25 units) $ 4,850 $ 11,150 Accounts Payable (Jan Rent) $ Accounts Receivable Allowance for Doubtful Accounts Inventory (30 units) $(1,400) Notes Payable $ 2,700 Contributed Capital Retained Earnings - Feb 1, 2012 15,000 $ 6,000 $4,420 . WWC establishes a policy that it will sell inventory at $170 per unit. In January, WWC received a $4,850 advance for 25 units, as reflected in Unearned Revenue WWC's February 1 inventory balance consisted of 30 units at a total cost of $2,700. . 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 Included in WWC's February 1 Accounts Receivable balance is a $1,400 account due from Kit Kat, a WWC customer. Kit Kat is having cash flow problems and y cannot pay its balance at this time. WWC arranges with Kit Kat to convert the $1,400 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 10 WWC paid a $550 insurance premium covering the month of February. The amount paid is recorded directly as an expense. 20 An additional 140 units of inventory are purchased on account by WWC for $10,500 - terms 2/15, n30. 02/05 WWC paid Federal Express $420 to have the 140 units of inventory delivered overnight. Delivery occurred on 02/06. 02M0 Sales of 110 units of inventory occurred during the period of 02/07 - 02/10. The sales terms are 2/10, net 30. 26. The 25 units that were paid for in advance and recorded in January are delivered to the customer. 10 units of the inventory that had been sold on 2/10 are returned to WWC. The 02/15 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 $3,200. Paid in full the amount owed for the 2/05 purchase of inventory. WWC records 02/17 purchase discounts in the current period rather than as a reduction of inventory costs. 02/18 Wrote off a customer's account in the amount of $1,500 No $4,600 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. Collected $9,000 of customers' Accounts Receivable. Of the $9,000, the 02/19 discount was taken by customers on $5,500 of account balances; therefore WWC received less than $9,000. 20 WWC recovered $500 cash from the customer whose account had previously been written off (see 02/18). 02/27 A $450 utility bill for February arrived. It is due on March 15 and will be paid then. 02/28 WWC declared and paid a $450 cash dividend. Adjusting Entries: 02/29 Record the $3,200 employee salary that is owed but will be paid March 1. WWC decides to use the aging method to estimate uncollectible accounts. WWC 02/29 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). * Answer is not complete. WWC, Inc. Income Statement For the Month Ended February 29 Revenues Sales Revenue $ Less: Sales Returns and Allowances Less: Sales Discounts Net Sales Cost of Goods Sold Gross Profit $ 23,550 1,700 110 21,740 9,900 11,840 Expenses Insurance Expense Wages Expense Rent Expense Utility Expense Bad Debt Expense 6,400 2,300 OOOOO 900 Total Expenses Interest Expense Net Income 10,600 150 1,390 $ Answer is complete but not entirely correct. WWC, Inc. Statement of Retained Earnings For the Month Ended February 29 Retained Earnings, Beginning of Period $ Add: Net Income Less: Dividends Retained Earnings, End of Period $ 4,420 1,180 450 5,150 Answer is not complete. WWW, Inc. Balance Sheet Assets Liabilities Current Assets Cash $ $ Current Liabilities Accounts Payable Interest Payable Wages Payable 450 150 10,000 3,300 16,250 1,400 14 Inventory Accounts Receivable Notes Receivable Interest Receivable 3,200 Total Current Assets $ 30,964 Total Current Liabilities Notes Payable 3,800 15,000 18,800 Total liabilities Stockholders' Equity Contributed Capital Retained Earnings 6,000 5,150 Total Stockholders' Equity Total Liabilities and Stockholders' Equity 11.150 29,950 Total Assets $ 30,964 $
