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 (30 units) $ 21,470 Unearned Revenue (25 units) $ 5,300 3,200 $12,500 Accounts Payable (Jan Rent) $ 15,500 $(1,850) Notes Payable 6.900 $ 2,400 Contributed Capital $ Retained Earnings - Feb 1, 3,620 $ 2012 WWC establishes a policy that it will sell inventory at $165 per unit. In January, WWC received a $5,300 advance for 25 units, as reflected in Unearned Revenue. WWC's February 1 Inventory balance consisted of 30 units at a total cost of $2,400. WWC's note payable accrues interest at a 12% annual rate. WWC establishes a policy that it will sell inventory at $165 per unit. In January, WWC received a $5,300 advance for 25 units, as reflected in Unearned Revenue. WWC's February 1 inventory balance consisted of 30 units at a total cost of $2,400. 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 $1.700 account due from Kit Kat, a WWC customer. Kit Kat is having cash flow problems and 02/01 cannot pay its balance at this time. WWC arranges with Kit Kat to convert the $1.700 balance to a note, and Kit Kat signs a 6-month note, at 9% annual Interest The principal and all interest will be due and payable to WWC on August 1, 2012. WWC paid a $600 insurance premium covering the month of February. The 02/02 amount paid is recorded directly as an expense. An additional 170 units of inventory are purchased on account by WwC for 02/05 $12.750 - terms 2/15, n30. WWC paid Federal Express $510 to have the 170 units of inventory delivered 02/05 overnight. Delivery occurred on 02/06. 02/10 Sales of 140 units of inventory occurred during the period of 02/07 - 02/10. The sales terms are 2/10, net 30. 02/15 The 25 units that were paid for in advance and recorded in January are delivered to the customer 20 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 $2,700. 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 $1,950. 02/19 $6,400 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 $9.900 of customers' Accounts Receivable. Of the $9,900, the 02/19 discount was taken by customers on $7,500 of account balances; therefore WWC received less than $9,900. WWC recovered $590 cash from the customer whose account had previously 02/26 been written off (see 02/18). 02/27 A $900 utility bill for February arrived. It is due on March 15 and will be paid then. 02/28 WWC declared and paid a $850 cash dividend. Adjusting Entries: 02/29 Record the $2,700 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). bal. 15,500 End. bal. Retained Earnings Di 0 Beg. bal. CJE 2 3,620 Beg. bal. Feb. 28 CJE 1 CJE 3 900 X 0 0 End. bal. 2,720 End. bal. Sales Revenue Sales Ret Beg. Beg 1-c. Prepare the financial statements at the end of February. (Balance Sheet only, iter to be deducted must be indicated with a negative amount.) & Answer is not complete. WWC, Inc. Income Statement Revenues Sales Revenue Less: Sales Returns and Allowances Less: Sales Discounts $ 28,400 (3,300) (150) 24,950 $ 24,950 Expenses Antal and in 44 Less: Sales Discounts (150) 24,950 $ 24,950 X $ 11,025 x Expenses Cost of Goods Sold Interest Expense Wages Expense 600 x Bad Debt Expense Rent Expense Utility Expense Utility Expense 2,700 X (255) 1,010 3,200 900 2,700 21,880 155 3,225 x Interest Expense Net Income Required information Answer is not complete. WWC, Inc. Statement of Retained Earnings Retained Earnings, Beginning of Period Add: Net Income Less: Dividends Retained Eamings, End of Period 3,620 2,418 (850) 5,188 2 WWW, Inc. Balance Sheet Assets Liabilities Current Liabilities Current Assets Cash Accounts Receivable S $ SIS Interest Payable Wages Payable Accounts Paya + Notes Payable 155 2,700 900 Allowance for Doubtful Accounts > 8,255 18,750 (1,500) 13 1,700 4,125 OS 15,500 Interest Receivable Notes Receivable Inventory Total Current Assets $ 31,343 Total Current Liabilities $ 19,255 Total abilities 19,255 Required information Inventory 4,125% Total Current Assets $ 31,343 Total Current Liabilities 19,255 19,255 Total liabilities Stockholders' Equity Contributed Capital Retained Earnings 6.900 5,188 Total Assets Total Stockholders' Equity Total Liabilities and Stockholders' Equity $ 31,343 12,088 31,343 $ 2. Prepare all February 29 closing entries for WWC. Post to the T-Accounts in requirement 1-b. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) Answer is not complete. No Transaction General Journal Debit Credit