1 Required information (The following information applies to the questions displayed below.) 23 points 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: eBook References 5,050 Cash $20,720 Unearned Revenue (25 units) $ 2,700 $ 11,750 Accounts Payable (Jan Rent) $ Accounts Receivable Allowance for Doubtful Accounts Inventory (30 units) $(1,600) Notes Payable $ 13,000 6.400 $ $ 2,550 Contributed Capital Retained Earnings - Feb 1, 2012 6,270 WWC establishes a 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 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 $2,000 account M February Transactions Included in WWC's February 1 Accounts Receivable balance is a $2,000 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 $2,000 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 $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 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 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 $2,200. 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 $1,700. 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. WWC recovered $540 cash from the customer whose account had previously 02/26 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: 02/29 Record the $2,200 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). quired: . 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 > 7 8 View transaction list Journal entry worksheet Record the sales of 150 units of inventory. Note: Enter debits before credits. Debit Credit Date General Journal Feb. 10a Accounts Receivable Sales Revenue Record entry Clear entry View general journal Required information 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 End. bal End. bal. Notes Receivable Interest Receivable Beg bal Beg bal End. bal. End. bal Accounts Payable Unearned Revenue Beg bal Beg bal End, bal End. bal Wages Payable Interest Payable Beg. bal Beg bal Notes Payable Contributed Capital Beg. bal Beg bal End. bal. End, bal Retained Earnings Dividends Declared Beg bal Beg. bal. End. bal End. bal Sales Revenue Sales Returns & Allowances Beg bal Beg bal End. bal. End. bal. Sales Discounts Cost of Goods Sold Beg bal Beg bal End. bal. End. bal. Interest Revenue Bad Debt Expense Beg. bal Beg bal. End, bal End. bal. Insurance Expense Interest Expense Beg. bal Beg. bal End. bal. End. bal. Insurance Expense Interest Expense Beg bal Beg bal End, bal End, bal Rent Expense Utility Expense Beg. bal. Beg. bal. End. bal. End. bal Wages Expense 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 WWC, Inc. Statement of Retained Earnings Retained Earnings. Beginning of Period Retained Earnings. End of Period Statement of Retained Earnings Retained Earnings, Beginning of Period Retained Earnings. End of Period WWW.Inc. Balance Sheet Assets Liabilities Current Assets Current Liabilities Total Current Assets Total Current Liabilities Total liabilities Stockholders' Equity Total Stockholders' Equity Total Liabilities and Stockholders' Equity Total Assets 2 Prepare all February 29 closing entries for WWC. Post to the T-Accounts in requirement 1-6. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) View transaction Mat Journal entry worksheet > 7 8 View transaction list Journal entry worksheet Record the sales of 150 units of inventory. Note: Enter debits before credits. Debit Credit Date General Journal Feb. 10a Accounts Receivable Sales Revenue Record entry Clear entry View general journal Required information 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 End. bal End. bal. Notes Receivable Interest Receivable Beg bal Beg bal End. bal. End. bal Accounts Payable Unearned Revenue Beg bal Beg bal End, bal End. bal Wages Payable Interest Payable Beg. bal Beg bal Notes Payable Contributed Capital Beg. bal Beg bal End. bal. End, bal Retained Earnings Dividends Declared Beg bal Beg. bal. End. bal End. bal Sales Revenue Sales Returns & Allowances Beg bal Beg bal End. bal. End. bal. Sales Discounts Cost of Goods Sold Beg bal Beg bal End. bal. End. bal. Interest Revenue Bad Debt Expense Beg. bal Beg bal. End, bal End. bal. Insurance Expense Interest Expense Beg. bal Beg. bal End. bal. End. bal. Insurance Expense Interest Expense Beg bal Beg bal End, bal End, bal Rent Expense Utility Expense Beg. bal. Beg. bal. End. bal. End. bal Wages Expense 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 WWC, Inc. Statement of Retained Earnings Retained Earnings. Beginning of Period Retained Earnings. End of Period Statement of Retained Earnings Retained Earnings, Beginning of Period Retained Earnings. End of Period WWW.Inc. Balance Sheet Assets Liabilities Current Assets Current Liabilities Total Current Assets Total Current Liabilities Total liabilities Stockholders' Equity Total Stockholders' Equity Total Liabilities and Stockholders' Equity Total Assets 2 Prepare all February 29 closing entries for WWC. Post to the T-Accounts in requirement 1-6. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) View transaction Mat Journal entry worksheet