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 $ 39,710 12,260 680 3,500 5,600 1,590 24,000 18,400 5,200 * The following information is relevant to the first month of operations in the following year: OTP will sell Inventory at $140 per unit. OTP's January 1 inventory balance consists of 50 units at a total cost of $3,500 OTP's policy is to use the FIFO method, recorded using a perpetual inventory system In December, OTP received a $5,600 payment for 40 units OTP is to deliver in January; this obligation was recorded in Deferred Revenue. Rent of $1,050 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, at 10% annual interest. Jeff signs the promissory note, which indicates the principal and all Interact will ha dito and novohlarn OTD on When the var 1 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 0101, OTP arranges with Jeff to convert the $2,400 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 $160 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 0105 at a total cost of $10,000, with terms n/30 d. OTP paid a courier $400 cash on 0105 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 f. On 01/07, OTP received a purchase allowance of $1,600 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). 9. Sales of 60 units of inventory occurring during the period of 01/07-0110 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 $4,220. 1. Wrote off a $1,400 customer's account balance on 01/18, OTP uses the allowance method, not the direct write-off method. k Paid $2,100 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 $570 cash on 01/26 from the customer whose account had previously been written off on 0118 m. An unrecorded $120 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 01/10-0128, with terms n/30, are recorded on 01/28. o 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 $4,220 employee salary that is owed but will be paid February 1. 9. OTP uses the aging method to estimate and adjust for uncollectible accounts on 0131. 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.) 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).