Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Need help with the T-accounts! Wally's Widget Company (WWC) incorporated near the end of 2011. Operations began in January of 2012. WWC prepares adjusting entries
Need help with the T-accounts!
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: $4,700 $ 2,000 $13,500 $5,700 Retained Earnings -Feb 1, 2012 5,670 $ 19,670 Unearned Revenue (30 units) $ 10,700 Accounts Payable (Jan Rent) Cash Accounts Receivable Allowance for Doubtful Accounts (1,250) Notes Payable Inventory (35 units) $ 2,450 Contributed Capital . WWC establishes a policy that it will sell inventory at $155 per unit. . In January, WWC received a $4,700 advance for 30 units, as reflected in Unearned Revenue . WWC's February 1 inventory balance consisted of 35 units at a total cost of $2,450 * 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 Receivable balance is a $1,300 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 $1,300 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 $400 insurance premium covering the month of February. The amount paid is recorded 02/05 An additional 180 units of inventory are purchased on account by WWC for $13,500-terms 2/15, 02/05 WWC paid Federal Express $360 to have the 180 units of inventory delivered overnight. Delivery 02/10 Sales of 150 units of inventory occurred during the period of 02/07 - 02/10. The sales terms are 02/15 The 30 units that were paid for in advance and recorded in January are delivered to the customer. directly as an expense n30 occurred on 02/06 2/10, net 30 02/15 20 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 02/16 WWC pays the first 2 weeks wages to the employees. The total paid is $2,900 02/17 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 02/18Wrote off a customer's account in the amount of $1,350 02/19 $4,000 of rent for January and February was paid. Because all of the rent will soon expire, the 02/19 Collected $8,700 of customers' Accounts Receivable. Of the $8,700, the discount was taken by 02/26 WWC recovered $470 cash from the customer whose account had previously been written off (see 02/27 A $850 utility bill for February arrived. It is due on March 15 and will be paid then February portion of the payment is charged directly to expense customers on $4,000 of account balances; therefore WWC received less than $8,700 02/18) 02/28 WWC declared and paid a $700 cash dividend Adjusting Entries 02/29 Record the $2,900 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) -b. Post all February entries (transactions and adjustments) to the T-accounts Answer is not complete. Cash Accounts Receivable Beg bal Feb 19b Feb 26b 19,6700 Beg bal 10,700 0 8,620400 Feb. 2 23,250 1,300 Feb. 1 10a Feb 26a 3,100Feb 15d 470 360 Feb. 6 470 2,900 Feb. 16 01,350 Feb. 18 013,230 Feb. 17 Feb. 70019b 0 4,000 19a 700 Feb. 28 Feb 470 26b Feb 0 0 End bal End bal 7,170 19,500 Allowance for Doubtful Accounts Inventory Beg bal 01,250 Beg bal 2,450 13,500 360 1,540 0 11,305 | Feb 10b Feb. 18 1,350 470 26aFeb. 5 1,190Feb 2,310Feb 15b Feb. 6 29b Feb 15c 270 Feb. 17 End bal End bal 1,560 3,965 Notes Receivable Interest Receivable Beg bal Beg bal Feb 29d Feb. 13000C 1,300 0 End bal End bal 1,300 Accounts Payable Unearned Revenue Beg bal Beg bal Feb. 15a 2,000 4,700 Feb. 17 Feb 19a 13,50013,500Feb. 5 4,700 2,0008 850 Feb. 27 0 0 0 0 End bal End bal 850 Wages Payable Interest Payable Beg bal Beg bal 2,900Feb 29a 135Feb 29c 0 End bal End bal 2,900 135 Notes Payable Contributed Capital Beg bal 013,500 Beg bal 0 5,700 End bal End bal 13,500 5,700 Dividends Declared Retained Earnings 5,670 2,180 24,783 Beg. bal. Beg. bal Feb. 28 700 700 0 End bal End. bal 7,573 700 Sales Revenue Sales Returns & Allowances Beg bal Beg bal Feb. 15d Feb. 23,250 Feb. 4,700 15a End bal End. bal 27,950 3,100 Sales Discounts Cost of Goods Sold Beg bal Feb. 19b Beg bal Feb 10b Feb 15b Feb. 80 11,3051,540 2.3100 End bal End. bal 80 12,075 Interest Revenue Bad Debt Expense Beg bal Beg bal Feb 29b Feb 29d 13 0 0 13 1,190 End bal End bal 1,190 Insurance Expense Interest Expense Beg bal Beg bal Feb 29c 0 Feb. 2 4000 135 End bal End bal 400 135 Rent Expense Utility Expense Beg bal Feb 19a Beg bal Feb. 27 8500 0 0 End bal End bal 2,000 850 Wages Expense Beg bal Feb. 16 2,900 Feb 200O 29a 5,800Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started