[ine rollowing inrormation appies to the questions displayed below. Check 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 Accounts Receivable Allowance for Doubtful Accounts Inventory (35 units) $20,870 Unearned Revenue (30 units) $5,100 $ 11,900 Accounts Payable (Jan Rent) $ 2,800 $ (1,650) Notes Payable 13,500 $ 2,975 Contributed Capital Retained Earnings - Feb 1 $6,195 $ $ 6,500 ces 2012 WWC establishes a policy that it will sell inventory at $165 per unit. In January, WWC received a $5,100 advance for 30 units, as reflected in Unearned Revenue. WWC's February 1 inventory balance consisted of 35 units at a total cost of $2,975 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 $1,300 account due from Kit Kat, a WWC customer. Kit Kat is having cash flow problems and 02/01 cannot pay its balance at this time. WwC arranges with Kit Kat to convert the $1,300 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 02/02 wwc paid a $800 insurance premium covering the month of February. The amount paid is recorded directly as an expense. 02/05 An additional 190 units of Inventory are purchased on account by WwC for 14 tarmenn WWC establishes a policy that it will sell inventory at $165 per unit. In January, WWC received a $5,100 advance for 30 units, as reflected in Unearned Revenue WWC's February 1 inventory balance consisted of 35 units at a total cost of $2,975 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 $1,300 account due from Kit Kat, a WWC customer. Kit Kat is having cash flow problems and 02/01 cannot pay its balance at this time. WwC arranges with Kit Kat to convert the $1,300 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 02/02 wwc paid a $800 insurance premium covering the month of February. The amount paid is recorded directly as an expense. An additional 190 units of inventory are purchased on account by WwC for 02/05 $14,250 - terms 2/15, n30. 02/05 WWC paid Federal Express $380 to have the 190 units of inventory delivered overnight. Delivery occurred on 02/06. 02/10 Sales of 160 units of inventory occurred during the period of 02/07 - 02/10. The sales terms are 2/10, net 30. 02/15 The 30 units that were paid for in advance and recorded in January are delivered to the customer 25 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 $2,300. Pald 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 02/18 Wrote off a customer's account in the amount of $1,750. $5,600 of rent for January and February was paid. Because all of the rent will 02/19 soon expire, the February portion of the payment is charged directly to expense. Collected $9,500 of customers' Accounts Receivable. Of the $9,500, the costs. AMIRAR COALA Sav UZI W WC pays the first 2 weeks wages to the employees, ine totai pala is $2,300. 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 $1,750. 02/19 $5,600 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 $9,500 of customers' Accounts Receivable. Of the $9,500, the 02/19 discount was taken by customers on $6,500 of account balances; therefore WWC received less than $9,500. WWC recovered $550 cash from the customer whose account had previously 02/26 been written off (see 02/18). 02/27 A $700 utility bill for February arrived. It is due on March 15 and will be paid then. 02/28 WWC declared and paid a $950 cash dividend. Adjusting Entries: 02/29 Record the $2,300 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). Note: Enter debits before credits. Date General Journal Debit Credit Feb. 1 Record entry Clear entry View general journal 1-b. Post all February entries (transactions and adjustments) to the T-accounts. Cash Accounts Receivable Beg. bal. Beg. bal. Prey 1 of 1 Next Required information End. bal. End. bal. Allowance for Doubtful Accounts Inventory Beg. bal. Beg. bal. End, bal End, bal. Notes Receivable Interest Receivable Beg, bal. Beg. bal. End, bal End. bal. Accounts Payable Unearned Revenue 1-c. Prepare the financial statements at the end of February (Balance Sheet only, items to be deducted must be indicated with a negative amount.) WWC, Inc. Income Statement WWC, Inc. Statement of Retained Earnings Retained Earnings, Beginning of Period Retained Earnings, End of Period WWW, Inc. Balance Sheet Assets Current Assets Llabilities Current Liabilities ok ences Total Current Assets Total Current Liabilities Total liabilities Stockholders' Equity Total Stockholders' Equity Total Liabilities and Stockholders' Equity Total Assets