Project 2 Review of Merchandising Cycle The following information applies to the questions displayed below Wallys 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 Cash $ 21,620 Unearned Revenue (30 units) $ 5,350 Accounts Receivable $ 12,650 Accounts Payable (Jan Rent) $ 3,300 Allowance for Doubtful Accounts $ (1,900) Notes Payable $ 16,000 Inventory (35 units) $ 2,800 Contributed Capital $ 7,000 Retained Earnings Feb 1, 2012 $ 3,520 WWC establishes a policy that it will sell inventory at $180 per unit In January, WWC received a $5,350 advance for 30 units, as reflected in Unearned Revenue WWCs February 1 inventory balance consisted of 35 units at a total cost of $2,800 WWCs note payable accrues interest at a 12 annual rate WWC will use the FIFO inventory method and record COGS on a perpetual basis February Transactions 02 01 Included in WWCs February 1 Accounts Receivable balance is a $1,400 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 $1,400 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, 2012 02 02 WWC paid a $650 insurance premium covering the month of February The amount paid is recorded directly as an expense 02 05 An additional 180 units of inventory are purchased on account by WWC for $13,500 terms 2 15, n30 02 05 WWC paid Federal Express $360 to have the 180 units of inventory delivered overnight Delivery occurred on 02 06 02 10 Sales of 150 units of inventory occurred during the period of 02 07 02 10 The sales terms are 2 10, net 30 02 15 The 30 units that were paid for in advance and recorded in January are delivered to the customer 02 15 25 units of the inventory that had been sold on 2 10 are returned to WWC The units are not damaged and can be resold Therefore, they are returned to inventory Assume the units returned are from the 2 05 purchase 02 16 WWC pays the first 2 weeks wages to the employees The total paid is $2,800 02 17 Paid in full the amount owed for the 2 05 purchase of inventory WWC records purchase discounts in the current period rather than as a reduction of inventory costs 02 18 Wrote off a customers account in the amount of $2,000 02 19 $6,600 of rent for January and February was paid Because all of the rent will soon expire, the February portion of the payment is charged directly to expense 02 19 Collected $10,000 of customers Accounts Receivable Of the $10,000, the discount was taken by customers on $8,000 of account balances therefore WWC received less than $10,000 02 26 WWC recovered $600 cash from the customer whose account had previously been written off (see 02 18) 02 27 A $950 utility bill for February arrived It is due on March 15 and will be paid then 02 28 WWC declared and paid a $950 cash dividend Adjusting Entries 02 29 Record the $2,800 employee salary that is owed but will be paid March 1 02 29 WWC decides to use the aging method to estimate uncollectible accounts WWC determines 8 of the ending balance is the appropriate end of February estimate of uncollectible accounts 02 29 Record February interest expense accrued on the note payable 02 29 Record one months interest earned Kit Kats note (see 02 01) Project 2 Part1 2 1 a Prepare all Feoruary jourmall entries and acjusting entries if mo entry lis required for a transactionievent, select No Journal Entry Required in the first account fied ) Answer is not complete No Gemeral Journal Feo 1 Accounte Recehaole FRo 2 neurance Epense 650 Feo 5 Accounts Pajaole 13 500 Feo 6 Fea 103 27,000 Sales Raenue Feo 100 Cos of Goods Sol 12,000 12 000 Feo 15a Unearned Revenue 5 350 Salee Reenue 5 350 Feo 150 Cost of Goods Sokd Feo 150 Cost ot Goods Sols 10 Feo 150 Sales Retuns and Allowance 4 500 Accounte Recehaole Feo 16 2 800 Feb, 17 13,500 13230 Feo 18 for Douotuil Accounts 2 000 Accounte Recehaole 2 000 3 300 3 300 Feo 19a Rent Expenee Canh 6600 Feo 190 9,840 Sales Dscounte Accounts Receveole Feo 26a Alowance for Douorul Accounta Fea 250 Accounts Recevaoie Feo 27 ty Expense Accounts Pajaole Feo 28 vidends Declared Fea 29a 23000 agee Payable 2 800 Feo 290 Bad Dest Expense or DouseCul Accounts Feo 29c nberest Expense intereet Payadile Feo 290 ntereet Receaole rtereet Revenue

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Project 2: Review of Merchandising Cycle [The following information applies to the questions displayed below.] Wallys Widget Company (WWC) incorporated near the end of 2011.

Project 2: Review of Merchandising Cycle

[The following information applies to the questions displayed below.]

Wallys 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:


Cash	$	21,620	Unearned Revenue (30 units)	$	5,350
Accounts Receivable	$	12,650	Accounts Payable (Jan Rent)	$	3,300
Allowance for Doubtful Accounts	$	(1,900)	Notes Payable	$	16,000
Inventory (35 units)	$	2,800	Contributed Capital	$	7,000
			Retained Earnings Feb 1, 2012	$	3,520

	WWC establishes a policy that it will sell inventory at $180 per unit.
	In January, WWC received a $5,350 advance for 30 units, as reflected in Unearned Revenue.
	WWCs February 1 inventory balance consisted of 35 units at a total cost of $2,800.
	WWCs note payable accrues interest at a 12% annual rate.
	WWC will use the FIFO inventory method and record COGS on a perpetual basis.

February Transactions
02/01	Included in WWCs February 1 Accounts Receivable balance is a $1,400 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 $1,400 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, 2012.
02/02	WWC paid a $650 insurance premium covering the month of February. The amount paid is recorded directly as an expense.
02/05	An additional 180 units of inventory are purchased on account by WWC for $13,500 terms 2/15, n30.
02/05	WWC paid Federal Express $360 to have the 180 units of inventory delivered overnight. Delivery occurred on 02/06.
02/10	Sales of 150 units of inventory occurred during the period of 02/07 02/10. The sales terms are 2/10, net 30.
02/15	The 30 units that were paid for in advance and recorded in January are delivered to the customer.
02/15	25 units of the inventory that had been sold on 2/10 are returned to WWC. The units are not damaged and can be resold. Therefore, they are returned to inventory. Assume the units returned are from the 2/05 purchase.
02/16	WWC pays the first 2 weeks wages to the employees. The total paid is $2,800.
02/17	Paid in full the amount owed for the 2/05 purchase of inventory. WWC records purchase discounts in the current period rather than as a reduction of inventory costs.
02/18	Wrote off a customers account in the amount of $2,000.
02/19	$6,600 of rent for January and February was paid. Because all of the rent will soon expire, the February portion of the payment is charged directly to expense.
02/19	Collected $10,000 of customers Accounts Receivable. Of the $10,000, the discount was taken by customers on $8,000 of account balances; therefore WWC received less than $10,000.
02/26	WWC recovered $600 cash from the customer whose account had previously been written off (see 02/18).
02/27	A $950 utility bill for February arrived. It is due on March 15 and will be paid then.
02/28	WWC declared and paid a $950 cash dividend.

Adjusting Entries:

02/29	Record the $2,800 employee salary that is owed but will be paid March 1.
02/29	WWC decides to use the aging method to estimate uncollectible accounts. WWC determines 8% of the ending balance is the appropriate end of February estimate of uncollectible accounts.
02/29	Record February interest expense accrued on the note payable.
	02/ 29 Record one months interest earned Kit Kats note (see 02/01)

Project 2: Part1&2 1-a. Prepare all Feoruary jourmall entries and acjusting entries [if mo entry lis required for a transactionievent, select "No Journal Entry Required in the first account fied.) Answer is not complete. No Gemeral Journal Feo. 1 Accounte Recehaole FRo. 2 neurance Epense 650 Feo. 5 Accounts Pajaole 13.500 Feo. 6 Fea. 103 27,000 Sales Raenue Feo. 100 Cos of Goods Sol 12,000 12 000 Feo. 15a Unearned Revenue 5.350 Salee Reenue 5.350 Feo. 150 Cost of Goods Sokd Feo. 150 Cost ot Goods Sols 10 Feo. 150 Sales Retuns and Allowance 4.500 Accounte Recehaole Feo. 16 2.800 Feb, 17 13,500 13230 Feo. 18 for Douotuil Accounts 2.000 Accounte Recehaole 2.000 3.300 3.300 Feo. 19a Rent Expenee Canh 6600 Feo. 190 9,840 Sales Dscounte Accounts Receveole Feo. 26a Alowance for Douorul Accounta Fea 250 Accounts Recevaoie Feo. 27 ty Expense Accounts Pajaole Feo. 28 vidends Declared Fea 29a 23000 agee Payable 2.800 Feo. 290 Bad Dest Expense or DouseCul Accounts Feo. 29c nberest Expense intereet Payadile Feo 290 ntereet Receaole rtereet Revenue