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) $21,620 Unearned Revenue (30 units) $ 5,350 $12,650 Accounts Payable (Jan Rent) $ 3,300 $(1,900) Notes Payable $ 16,000 $ 2,800 Contributed Capital s 7.000 Retained Earnings - Feb 1, s3,520 2012 . WwC establishes a policy that it will sell Inventory at $180 per unit. In January, WWC received a $5,350 advance for 30 units, as reflected in Unearned Revenue. WWC's February 1 Inventory balance consisted of 35 units at a total cost of $2,800. 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. 1 February Transactions Included in WWC's February 1 Accounts Receivable balance is a $1,400 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 $1,400 balance to a note, and Kit Kat signs a 6-month note, at 12% annual Interest. nd all interest will be due and payable to WWC on August 1, 2012 20 WWC paid a $650 Insurance premium covering the month of February. The VZIUZ amount paid is recorded directly as an expense. 205 An additional 180 units of Inventory are purchased on account by WwC for $13,500 - terms 2/15,n30. 02/05 WWC pald Federal Express $360 to have the 180 units of Inventory delive overnight. Delivery occurred on 02/06. 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 A 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 cpays the first 2 weeks wages to the employees. The total pald Is $2,800. Pald in full the amount owed for the 2/05 purchase of Inventory. WWC records 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) $21,620 Unearned Revenue (30 units) $ 5,350 $12,650 Accounts Payable (Jan Rent) $ 3,300 $(1,900) Notes Payable $ 16,000 $ 2,800 Contributed Capital s 7.000 Retained Earnings - Feb 1, s3,520 2012 . WwC establishes a policy that it will sell Inventory at $180 per unit. In January, WWC received a $5,350 advance for 30 units, as reflected in Unearned Revenue. WWC's February 1 Inventory balance consisted of 35 units at a total cost of $2,800. 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. 1 February Transactions Included in WWC's February 1 Accounts Receivable balance is a $1,400 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 $1,400 balance to a note, and Kit Kat signs a 6-month note, at 12% annual Interest. nd all interest will be due and payable to WWC on August 1, 2012 20 WWC paid a $650 Insurance premium covering the month of February. The VZIUZ amount paid is recorded directly as an expense. 205 An additional 180 units of Inventory are purchased on account by WwC for $13,500 - terms 2/15,n30. 02/05 WWC pald Federal Express $360 to have the 180 units of Inventory delive overnight. Delivery occurred on 02/06. 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 A 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 cpays the first 2 weeks wages to the employees. The total pald Is $2,800. Pald in full the amount owed for the 2/05 purchase of Inventory. WWC records