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 $12,500 Accounts Payable (Jan Rent) $ 3,200 $(1,850) Notes Payable 15,500 $ 2,400 Contributed Capital 6,900 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 will use the FIFO inventory method and record COGS on a perpetual basis. February Transactions AL... 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. 02/02 WWC paid a $600 insurance premium covering the month of February. The 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. 02/05 WWC paid Federal Express $510 to have the 170 units of inventory delivered 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. The 25 units that were paid for in advance and recorded in January are delivered 02/15 to the customer 20 units of the inventory that had been scd 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. Pald 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 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 costs. 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. Do 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). ces 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 Journal entry worksheet 2 3 6 8.... 23 1-b. Post all February entries (transactions and adjustments) to the T-accounts. Cash Accounts Receivable Beg. bal. Beg. bal End bal. End, bal. Allowance for Doubtful Accounts Inventory Beg. bal Beg, bal 1-c. Prepare the financial statements at the end of February (Balance Sheet only, items to be deducted must be indicated with a negative amount.) WwC, Inc. Income Statement Prey 1 of 1 Next * # $ % & 2. 3 4 5 02 7. 8 w c E E R. T Y U 1 . Required information WWC, Inc. Statement of Retained Earnings Retained Earnings, Beginning of Period Retained Earnings, End of Period