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 Retained Earnings credit balance $ 41,218 12,958 370 2,000 6,000 1,9201 24,000 19,800 4,070 The following information is relevant to the first month of operations in the following year: OTP will sell inventory at $150 per unit. OTP's January 1 inventory balance consists of 50 units at a total cost of $2,000 OTP's policy to use the FIFO method, recorded using a perpetual inventory system is In December, OTP received a $6.000 payment for 40 units OTP is to deliver in January, this obligation was recorded in Deferred Revenue. Rent of $1.220 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 $2,400 balance due from Jeff Letrotski. Jeff is having cash flow problems and cannot pay the $2.400 balance at this time. On 01/01, OTP arranges with Jeff to convert the $2,400 balance to a six- month note, et 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 OTP paid a $180 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) 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 a Collected payments on 01/14 from sales to customers recorded on 01/10 OTP paid the first 2 weeks' wages to the employees on 01/16 The total paid is $4,940 Wrote off a $1,010 customer's account balance on 01/18. OTP uses the allowance method, not the direct write-off method Paid $2.440 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