Wallys 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 $ 20,420 Unearned Revenue (35 units) $ 4,950 Accounts Receivable $ 11,450 Accounts Payable (Jan Rent) $ 2,500 Allowance for Doubtful Accounts $ (1,500) Notes Payable $ 16,000 Inventory (40 units) $ 3,600 Contributed Capital $ 6,200 Retained Earnings Feb 1, 2012 $ 4,320 WWC establishes a policy that it will sell inventory at $145 per unit In January, WWC received a $4,950 advance for 35 units, as reflected in Unearned Revenue WWCs February 1 inventory balance consisted of 40 units at a total cost of $3,600 WWCs 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 02 01 Included in WWCs February 1 Accounts Receivable balance is a $1,800 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 $1,800 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 $650 insurance premium covering the month of February The amount paid is recorded directly as an expense 02 05 An additional 160 units of inventory are purchased on account by WWC for $12,000 terms 2 15, n30 02 05 WWC paid Federal Express $320 to have the 160 units of inventory delivered overnight Delivery occurred on 02 06 02 10 Sales of 130 units of inventory occurred during the period of 02 07 02 10 The sales terms are 2 10, net 30 02 15 The 35 units that were paid for in advance and recorded in January are delivered to the customer 02 15 10 units of the inventory that had been sold on 2 10 are returned to WWC The 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 $2,000 02 17 Paid in full the amount owed for the 2 05 purchase of inventory WWC records purchase discounts in the current period rather than as a reduction of inventory costs 02 18 Wrote off a customers account in the amount of $1,600 02 19 $5,000 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 02 19 Collected $9,200 of customers Accounts Receivable Of the $9,200, the discount was taken by customers on $6,500 of account balances therefore WWC received less than $9,200 02 26 WWC recovered $520 cash from the customer whose account had previously been written off (see 02 18) 02 27 A $550 utility bill for February arrived It is due on March 15 and will be paid then 02 28 WWC declared and paid a $650 cash dividend Adjusting Entries 02 29 Record the $2,000 employee salary that is owed but will be paid March 1 02 29 WWC decides to use the aging method to estimate uncollectible accounts WWC 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 months interest earned Kit Kats note (see 02 01) Need Help with Missing Entries Current Assets Cash Inventory Accounts Receivable Interest Receivable Notes Receivable Total Current Assets Total Assets Assets Answer is not complete WWW, Inc Balance Sheet At February 29 Liabilities Current Liabilities 9,630 Accounts Payable 3,225 16,250 Interest Payable 14 Wages Payable 1,800 30,919 Total Current Liabilities Notes Payable Total liabilities Stockholders' Equity Retained Earnings Total Stockholders' Equity 30,919 Total Liabilities and Stockholders' Equity S 550 160 2,000 2,710 16,000 18,710 0 18,710 Current Assets Cash Inventory Accounts Receivable Interest Receivable Notes Receivable Total Current Assets Total Assets Assets Answer is not complete WWW, Inc Balance Sheet At February 29 Liabilities Current Liabilities 9,630 Accounts Payable 3,225 16,250 Interest Payable 14 Wages Payable 1,800 30,919 Total Current Liabilities Notes Payable Total liabilities Stockholders' Equity Retained Earnings Total Stockholders' Equity 30,919 Total Liabilities and Stockholders' Equity S 550 160 2,000 2,710 16,000 18,710 0 18,710

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Wallys Widget Company (WWC) incorporated near the end of 2011. Operations began in January of 2012. WWC prepares adjusting entries and financial statements at the

Wallys 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	$	20,420	Unearned Revenue (35 units)	$	4,950
Accounts Receivable	$	11,450	Accounts Payable (Jan Rent)	$	2,500
Allowance for Doubtful Accounts	$	(1,500)	Notes Payable	$	16,000
Inventory (40 units)	$	3,600	Contributed Capital	$	6,200
			Retained Earnings Feb 1, 2012	$	4,320

	WWC establishes a policy that it will sell inventory at $145 per unit.
	In January, WWC received a $4,950 advance for 35 units, as reflected in Unearned Revenue.
	WWCs February 1 inventory balance consisted of 40 units at a total cost of $3,600.
	WWCs 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
02/01	Included in WWCs February 1 Accounts Receivable balance is a $1,800 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 $1,800 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 $650 insurance premium covering the month of February. The amount paid is recorded directly as an expense.
02/05	An additional 160 units of inventory are purchased on account by WWC for $12,000 terms 2/15, n30.
02/05	WWC paid Federal Express $320 to have the 160 units of inventory delivered overnight. Delivery occurred on 02/06.
02/10	Sales of 130 units of inventory occurred during the period of 02/07 02/10. The sales terms are 2/10, net 30.
02/15	The 35 units that were paid for in advance and recorded in January are delivered to the customer.
02/15	10 units of the inventory that had been sold on 2/10 are returned to WWC. The 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 $2,000.
02/17	Paid in full the amount owed for the 2/05 purchase of inventory. WWC records purchase discounts in the current period rather than as a reduction of inventory costs.
02/18	Wrote off a customers account in the amount of $1,600.
02/19	$5,000 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.
02/19	Collected $9,200 of customers Accounts Receivable. Of the $9,200, the discount was taken by customers on $6,500 of account balances; therefore WWC received less than $9,200.
02/26	WWC recovered $520 cash from the customer whose account had previously been written off (see 02/18).
02/27	A $550 utility bill for February arrived. It is due on March 15 and will be paid then.
02/28	WWC declared and paid a $650 cash dividend.

Adjusting Entries:

02/29	Record the $2,000 employee salary that is owed but will be paid March 1.
02/29	WWC decides to use the aging method to estimate uncollectible accounts. WWC 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 months interest earned Kit Kats note (see 02/01).

image text in transcribed Need Help with Missing Entries

Current Assets Cash Inventory Accounts Receivable Interest Receivable Notes Receivable Total Current Assets Total Assets Assets Answer is not complete WWW, Inc. Balance Sheet At February 29 Liabilities Current Liabilities 9,630 Accounts Payable 3,225 16,250 Interest Payable 14 Wages Payable 1,800 30,919 Total Current Liabilities Notes Payable Total liabilities Stockholders' Equity Retained Earnings Total Stockholders' Equity 30,919 Total Liabilities and Stockholders' Equity S 550 160 2,000 2,710 16,000 18,710 0 18,710 Current Assets Cash Inventory Accounts Receivable Interest Receivable Notes Receivable Total Current Assets Total Assets Assets Answer is not complete WWW, Inc. Balance Sheet At February 29 Liabilities Current Liabilities 9,630 Accounts Payable 3,225 16,250 Interest Payable 14 Wages Payable 1,800 30,919 Total Current Liabilities Notes Payable Total liabilities Stockholders' Equity Retained Earnings Total Stockholders' Equity 30,919 Total Liabilities and Stockholders' Equity S 550 160 2,000 2,710 16,000 18,710 0 18,710