One Trick Pony (OTP) incorporated and began operations near the end of the year, resulting in the following post-closing balances at December 31: The following information is relevant to the first month of operations in the following year: - OTP will sell inventory at $160 per unit. OTP's January 1 inventory balance consists of 50 units at a total cost of $2,500. OTP's policy is to use the FIFO method, recorded using a perpetual inventory system. - In December, OTP recelved a $6,400 payment for 40 units OTP is to deliver in January; this obligation was recorded in Deferred Revenue. Rent of $1,080 was unpaid and recorded in Accounts Payable at December 31. - OTP's notes payable mature in three years, and accrue interest at a 10% annual rate. January Transactions a. Included in OTP's January 1 Accounts Receivable balance is a $3,600 balance due from Jeff Letrotski. Jeff is having cash flow problems and cannot pay the $3,600 balance at this time. On 01/01, OTP arranges with Jeff to convert the $3,600 balance to a sixmonth note, at 10% annual interest. Jeff signs the promissory note, which indicates the principal and ail interest will be due and payable to OTP on July 1 of this year: b. OTP paid a $310 insurance premium on 01/02, covering the month of January; the payment is recorded directly as an expense. c. OTP purchased an additional 200 units of inventory from a supplier on account on 01/05 at a total cost of $8,000, with terms n 130 . d. OTP paid a courier $400 cash on 0VO5 for same-day delivery of the 200 units of inventory e. The 40 units that OTP's customer paid for in advance in December are dellvered to the customer on 0106. f On OV07, OTP received a purchase allowance of $1,200 on account, and then paid the amount necessary to settie the balance. owed to the suionlier for the 1/05 nurchace of inventarv fin al a. Included in OTP's January 1 Accounts Receivable balance is a $3,600 balance due from Jeff Letrotski. Jeff is having cash flow problems and cannot pay the $3,600 balance at this time. On 01/01, OTP arranges with Jeff to convert the $3,600 balance to a sixmonth note, at 10% annual interest. Jeff signs the promissory note, which indicates the principal and all interest will be due and payable to OTP on July 1 of this year. b. OTP paid a $310 insurance premium on 01/02, covering the month of January; the payment is recorded directly as an expense. c. OTP purchased an additional 200 units of inventory from a supplier on account on 01/05 at a total cost of $8,000, with terms n/30. d. OTP paid a courier $400 cash on 01/05 for same-day delivery of the 200 units of inventory. e. The 40 units that OTP's customer paid for in advance in December are dellvered to the customer on 01/06. f. On 0107, OTP recelved a purchase allowance of $1,200 on account, and then paid the amount necessary to settle the balance owed to the supplier for the 1/05 purchase of inventory (in c). g. Sales of 60 units of inventory occurring during the period of 01/07-01/10 are recorded on 01/10. The sales terms are n/30. h. Collected payments on 01/14 from sales to customers recorded on 01/10. 1. OTP paid the first 2 weeks' wages to the employees on 01/16. The total paid is $4,800. j. Wrote off a $890 customer's account balance on 01/18. OTP uses the allowance method, not the direct write-off method. k. Paid $2,160 on 01/19 for December and January rent. See the earlier bullets regarding the December portion. The January portion will expire soon, so it is charged directly to expense. 1. OTP recovered $330 cash on 01/26 from the customer whose account had previously been written off on 01/18. m. An unrecorded $140 utility bill for January arrived on 01/27. It is due on 02/15 and will be paid then. n. Sales of 70 units of inventory during the period of 01/1001/28, with terms n/30, are recorded on 01/28. 0 . Of the sales recorded on 01/28, 10 units are returned to OTP on 01/30. The inventory is not damaged and can be resold. OTP. charges sales returns to a contra-revenue account. p. On 01/31, OTP records the $4,800 employee salary that is owed but will be paid February 1. q. OTP uses the aging method to estimate and adjust for uncollectible accounts on 01/31. All of OTP's accounts receivable fall into a single aging category, for which 10% is estimated to be uncollectible. (Update the balances of both relevant accounts prior to determining the appropriate adjustment.) r. Accrue interest for January on the notes payable on 01/31. s. Accrue interest for January on Jeff Letrotski's note on 01/31 (see a). One Trick Pony (OTP) incorporated and began operations near the end of the year, resulting in the following post-closing balances at December 31: The following information is relevant to the first month of operations in the following year: - OTP will sell inventory at $160 per unit. OTP's January 1 inventory balance consists of 50 units at a total cost of $2,500. OTP's policy is to use the FIFO method, recorded using a perpetual inventory system. - In December, OTP recelved a $6,400 payment for 40 units OTP is to deliver in January; this obligation was recorded in Deferred Revenue. Rent of $1,080 was unpaid and recorded in Accounts Payable at December 31. - OTP's notes payable mature in three years, and accrue interest at a 10% annual rate. January Transactions a. Included in OTP's January 1 Accounts Receivable balance is a $3,600 balance due from Jeff Letrotski. Jeff is having cash flow problems and cannot pay the $3,600 balance at this time. On 01/01, OTP arranges with Jeff to convert the $3,600 balance to a sixmonth note, at 10% annual interest. Jeff signs the promissory note, which indicates the principal and ail interest will be due and payable to OTP on July 1 of this year: b. OTP paid a $310 insurance premium on 01/02, covering the month of January; the payment is recorded directly as an expense. c. OTP purchased an additional 200 units of inventory from a supplier on account on 01/05 at a total cost of $8,000, with terms n 130 . d. OTP paid a courier $400 cash on 0VO5 for same-day delivery of the 200 units of inventory e. The 40 units that OTP's customer paid for in advance in December are dellvered to the customer on 0106. f On OV07, OTP received a purchase allowance of $1,200 on account, and then paid the amount necessary to settie the balance. owed to the suionlier for the 1/05 nurchace of inventarv fin al a. Included in OTP's January 1 Accounts Receivable balance is a $3,600 balance due from Jeff Letrotski. Jeff is having cash flow problems and cannot pay the $3,600 balance at this time. On 01/01, OTP arranges with Jeff to convert the $3,600 balance to a sixmonth note, at 10% annual interest. Jeff signs the promissory note, which indicates the principal and all interest will be due and payable to OTP on July 1 of this year. b. OTP paid a $310 insurance premium on 01/02, covering the month of January; the payment is recorded directly as an expense. c. OTP purchased an additional 200 units of inventory from a supplier on account on 01/05 at a total cost of $8,000, with terms n/30. d. OTP paid a courier $400 cash on 01/05 for same-day delivery of the 200 units of inventory. e. The 40 units that OTP's customer paid for in advance in December are dellvered to the customer on 01/06. f. On 0107, OTP recelved a purchase allowance of $1,200 on account, and then paid the amount necessary to settle the balance owed to the supplier for the 1/05 purchase of inventory (in c). g. Sales of 60 units of inventory occurring during the period of 01/07-01/10 are recorded on 01/10. The sales terms are n/30. h. Collected payments on 01/14 from sales to customers recorded on 01/10. 1. OTP paid the first 2 weeks' wages to the employees on 01/16. The total paid is $4,800. j. Wrote off a $890 customer's account balance on 01/18. OTP uses the allowance method, not the direct write-off method. k. Paid $2,160 on 01/19 for December and January rent. See the earlier bullets regarding the December portion. The January portion will expire soon, so it is charged directly to expense. 1. OTP recovered $330 cash on 01/26 from the customer whose account had previously been written off on 01/18. m. An unrecorded $140 utility bill for January arrived on 01/27. It is due on 02/15 and will be paid then. n. Sales of 70 units of inventory during the period of 01/1001/28, with terms n/30, are recorded on 01/28. 0 . Of the sales recorded on 01/28, 10 units are returned to OTP on 01/30. The inventory is not damaged and can be resold. OTP. charges sales returns to a contra-revenue account. p. On 01/31, OTP records the $4,800 employee salary that is owed but will be paid February 1. q. OTP uses the aging method to estimate and adjust for uncollectible accounts on 01/31. All of OTP's accounts receivable fall into a single aging category, for which 10% is estimated to be uncollectible. (Update the balances of both relevant accounts prior to determining the appropriate adjustment.) r. Accrue interest for January on the notes payable on 01/31. s. Accrue interest for January on Jeff Letrotski's note on 01/31 (see a)