Project 2: Review of Merchandising Cycle The following information applies to the questions displayed below] 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: $20,870 Unearned $11,900 Cash $5,100 $2,800 $13,500 6,500 Retained Earmings Feb 1, 2012$6,195 venue (30 units) Inventory (35 units) $ 2,975 . In January, WWC recelved a $5,100 advance for 30 units, as reflected in Unearned Revenue. . WWC's Februar . wwCs note payable accrues interest at a 12% annual rate. WWC will use the FIFO inventory method and record COGS on a perpetual basis y 1 inventory balance consisted of 35 units at a total cost of $2,975. 02/01 Included in WWC's February 1 Accounts Recelvable 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, 02/02 wwC paid a $800 Insurance premium covering the month of February. The amount pald Is recorded 02/05 An additional 190 units of inventory are purchased on account by WWC for $14,250- terms 2/15, 02/05 wwC pald Federal Express $380 to have the 190 units of inventory delvered overnight. Delvery 0210 Sales of 160 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. 2012 directly as an expense n30 occurred on 02/O6 2/10, net 30 25 units of the inventory that had been sold on 2/10 are returned to WWC. The units are not damaged and can be resoid. Therefore, they are returned to inventory. Assume the units returned are from the 2/05 purchase. wwC pays the first 2 weeks wages to the employees. The total paid is $2,300. 02/15 02/16 02/17 Paid in full the amount owed for the 2/05 purchase of inventory. WWC records purchase discounts