Required Information [The following information opplies 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 esch month. Bolonces in the accounts at the end of January are as follows: Cash Accounts Receivable Allowance for Doubtful Accounts Inventory (30 units) $20.720 Unearned Revenue (25 units) $ 5,050 $ 11,750 Accounts Payable (Jan Rent) $ 2.700 $ (1600) Notes Payable 13,000 $ $ 2,550 Contributed Capital 6,400 $ Retsined Earnings - Feb 1. $ 6,270 2012 . WWC establishes e policy that it will sell inventory at $170 per unit In January, WWC received a $5.050 advance for 25 units, as reflected in Unearned Revenue. WWC's February 1 inventory balance consisted of 30 units at a total cost of $2.550. WWC's note payable sccrues interest at 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 $2,000 account due from Kit Kat . WWC customer. Kit Kat is having cash flow problems and 02/01 cannot poy its baloncest this time, WWC arranges with Kit Kst to convert the $2,000 balance to s note, and Kit Kat signs a 6-month note, at 12% annual interest. The principal end all interest will be due and poyable to WW on August 1. 2012. 02/02 WWC peid - $750 insurance premium covering the month of February. The amount paid is recorded directly as an expense. 02/05 An additional 180 units of inventory sre 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 210.net 30. 02/15 The 25 units that were psic for in covence and recorded in January are delivered to the customer. 20 units of the inventory that had been sold on 200 are returned to WWC. The 0245 units sre not damaged and can be resold. Therefore, they sre 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 $2,200. Paid in full the amount owed for the 205 purchase of inventory. WWC records 02/7 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 $1700. 02/19 $5,400 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 $9,400 of customers' Accounts Receivable. Of the $9.400, the discount 02/19 was taken by customers on $6,000 of account balances: therefore WwC received less than $9,400. 02/26 WWC recovered $540 cash from the customer whose account had previously been written off (see 02/18). 02/27 A $650 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: 0229 Record the $2,200 employee selsry 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 the appropriate end of February estimate of uncollectible accounts. 0229 Record Februsry interest expense accrued on the note payable. 02/29 Record one month's interest earned Kit Kat's note (see 02/01). costs No Date General Journal Debit Credit 1 Feb. 1 Notes Receivable Accounts Receivable 2 Feb. 2 750 Insurance Expense Cash 750 3 Feb. 5 13,500 Inventory Accounts Payable 13,500 4 Feb. 6 Inventory 360 Cash 360 5 Feb. 10a 25,500 Accounts Receivable Sales Revenue 25,500 6 Feb. 10b Cost of Goods Sold Inventory 7 Feb. 15a Unearned Revenue Sales Revenue 8 Feb. 15b Cost of Goods Sold Inventory 9 Feb. 15C No Transaction Recorded 10 Feb. 150 No Transaction Recorded 11 Feb. 16 Wages Expense Cash 12 Feb 17 Accounts Payable Cash Sales Discounts 13 Feb. 18 Allowance for Doubtful Accounts Bad Debt Expense Accounts Receivable 14 Feb. 19a Accounts Payable Rent Expense Cash 15 Feb. 19b Cash Sales Discounts Accounts Receivable 16 Feb. 26a Accounts Receivable Allowance for Doubtful Accounts 17 Feb. 26b Cash Accounts Receivable 18 Feb. 27 Utility Expense Accounts Payable 19 Feb. 28 Dividends Declared Cash Accounts Receivable 18 Feb. 27 Utility Expense Accounts Payable 19 Feb. 28 Dividends Declared Cash 20 Feb. 29a Wages Expense Wages Payable 21 Feb. 296 Bad Debt Expense Allowance for Doubtful Accounts 22 Feb. 29c Interest Expense Interest Payable 23 Feb. 290 Interest Receivable Interest Revenue