! Required information [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: Cash Accounts Receivable Allowance for Doubtful Accounts Inventory (35 units) $20,870 Unearned Revenue (30 units) $5,100 2,800 $ 11,900 Accounts Payable (Jan Rent) $ $(1,650) Notes Payable 13,500 $ 2,975 Contributed Capital 6,500 Retained Earnings - Feb 1, 2012 $6,195 WWC establishes a policy that it will sell inventory at $165 per unit. In January, WWC received a $5,100 advance for 30 units, as reflected in Unearned Revenue. WWC's February 1 inventory balance consisted of 35 units at a total cost of $2,975. WWC's 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 Included in WWC's February 1 Accounts Receivable 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 02/01 $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, 2012 WWc paid a $800 insurance premium covering the month of February. The 02/02 amount paid is recorded directly as an expense. 02/05 An additional 190 units of inventory are purchased on account by WwC for $14,250 - terms 2/15, n30. WWC paid Federal Express $30 to have the 190 units of Inventory delivered 02/01 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, 2012. WWC paid a $800 insurance premium covering the month of February. The 02/02 amount paid is recorded directly as an expense. 02/05 An additional 190 units of inventory are purchased on account by WwC for $14,250 - terms 2/15, n30. 02/05 WWC paid Federal Express $380 to have the 190 units of inventory delivered overnight. Delivery occurred on 02/06. 02/10 Sales of 160 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. 25 units of the inventory that had been sold on 2/10 are returned to WWC. The 02/15 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 $2,300. Paid in full the amount owed for the 2/05 purchase of inventory. WWC records 02/17 purchase discounts in the current period rather than as a reduction of inventory costs. 02/18 Wrote off a customer's account in the amount of $1,750. 02/19 $5,600 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. Collected $9,500 of customers' Accounts Receivable. Of the $9,500, the 02/19 discount was taken by customers on $6,500 of account balances; therefore WWC received less than $9,500. WWC recovered $550 cash from the customer whose account had previously 02/26 been written off (see 02/18). 02/27 A $700 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 $2,300 employee salary that is owed but will be paid March 1. WWC decides to use the aging method to estimate uncollectible accounts. WWC 02/29 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 month's interest earned Kit Kat's note (see 02/01). Required: 1-a. Prepare all February journal entries and adjusting entries. (If no entry is required for a transaction/event, select "No Journal Entry Required in the first account field.) View transaction list View Journal entry worksheet .... SER No Date Credit 1 Feb. 1 General Journal Notes Receivable Accounts Receivable Deblt 1,300 1,300 2 Feb. 2 Insurance Expense Cash 800 800 3 Feb. 5 Inventory Accounts Payable 14,250 14,250 4 Feb. 6 Inventory Cash 380 be 380 5 5 Feb. 10a Accounts Receivable Sales Revenue 6 Feb. 10b Cost of Goods Sold Inventory 7 Feb. 150 Unearned Revenue Sales Revenue 8 Feb. 15b Cost of Goods Sold Inventory 9 Feb. 150 Inventory Cost of Goods Sold 10 Feb. 150 Sales Returns and Allowance Accounts Receivable 11 Feb. 16 Wages Expense Cash 12 Feb. 17 Accounts Payable Inventory Cash 13 Feb. 18 Allowance for Doubtful Accounts Accounts Receivable 14 Feb. 19a Rent Expense Accounts Payable Cash 15 Feb. 196 Cash Sales Discounts Accounts Receivable 16 Feb. 26a Accounts Receivable Allowance for Doubtful Accounts 17 Feb. 26b Cash Accounts Receivable 16 Feb. 26a Accounts Receivable Allowance for Doubtful Accounts 17 Feb. 26b Cash Accounts Receivable 700 18 Feb. 27 Utility Expense Accounts Payable 700 19 Feb. 28 950 Dividends Declared Cash 950 20 Feb. 29a 2,300 Wages Expense Wages Payable 2,300 21 Feb. 29b Bad Debt Expense Allowance for Doubtful Accounts 22 Feb. 290 Interest Expense Interest Payable 23 Feb, 290 Interest Receivable Interest Revenue