One Trick Pony (OTP) incorporated and began operations near the end of the year, resulting in the following post-closing balances at December 31: Cash Accounts Receivable Allowance for Doubtful Accounts Inventory Deferred Revenue (40 units) Accounts Payable Notes Payable (long-term) Common Stock $ 14,600 15,780) 470- 4,000 6,800 1,640 12,000 9,000 4,470 Retained Earnings credit balance. The following information is relevant to the first month of operations in the following year: OTP will sell inventory at $170 per unit. OTP's January 1 inventory balance consists of 50 units at a total cost of $4,000. OTP's policy is to use the FIFO method, recorded using a perpetual inventory system. In December, OTP received a $6,800 payment for 40 units OTP is to deliver in January; this obligation was recorded in Deferred Revenue. Rent of $1,460 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 $1,200 balance due from Jeff Letrotski. Jeff is having cash flow problems and cannot pay the $1,200 balance at this time. On 01/01, OTP arranges with Jeff to convert the $1,200 balance to a six- month 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 $380 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 delivered to the customer on 01/06. On 01/07, OTP received 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).