Question
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 | $ | 20,270 | Unearned Revenue (30 units) | $ | 4,900 | ||
Accounts Receivable | $ | 11,300 | Accounts Payable (Jan Rent) | $ | 2,400 | ||
Allowance for Doubtful Accounts | $ | (1,450) | Notes Payable | $ | 15,500 | ||
Inventory (35 units) | $ | 3,150 | Contributed Capital | $ | 6,100 | ||
Retained Earnings Feb 1, 2012 | $ | 4,370 | |||||
WWC establishes a policy that it will sell inventory at $160 per unit. | |
In January, WWC received a $4,900 advance for 30 units, as reflected in Unearned Revenue. | |
WWCs February 1 inventory balance consisted of 35 units at a total cost of $3,150. | |
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 $1,700 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 $1,700 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. |
02/05 | An additional 150 units of inventory are purchased on account by WWC for $11,250 terms 2/15, n30. |
02/05 | WWC paid Federal Express $300 to have the 150 units of inventory delivered overnight. Delivery occurred on 02/06. |
02/10 | Sales of 120 units of inventory occurred during the period of 02/07 02/10. The sales terms are 2/10, net 30. |
02/15 | The 30 units that were paid for in advance and recorded in January are delivered to the customer. |
02/15 | 15 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 $1,900. |
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 $1,550. |
02/19 | $4,800 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 $9,100 of customers Accounts Receivable. Of the $9,100, the discount was taken by customers on $6,000 of account balances; therefore WWC received less than $9,100. |
02/26 | WWC recovered $510 cash from the customer whose account had previously been written off (see 02/18). |
02/27 | A $500 utility bill for February arrived. It is due on March 15 and will be paid then. |
02/28 | WWC declared and paid a $550 cash dividend. |
Adjusting Entries: |
02/29 | Record the $1,900 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). |
can someone please tell me what I'm missing that is making this incomplete?
Beg bal. Feb. 196 Feb. 26b Cash 20,270 8,980 510 Beg, bal. Feb. 10a Feb. 26a 600 Feb. 2 300 Feb. 6 1,900 Feb. 16 11,025 Feb. 17 4,800 Feb. 19a 550 Feb. 28 Accounts Receivable 11,300 19,200 1,700 Feb. 1 510 2,400 Feb. 150 1,550 Feb 18 9,100 Feb. 196 510 Feb. 266 End: bal. 10,585 End. bal. 15.750 Allowance for Doubtful Accounts Beg. bal. 1,450 Feb 18 1,550 510 Feb. 26a 850 Feb. 290 Beg. bal. Feb. 5 Inventory 3,150 11.250 300 9,695 Feb. 10b Feb. 6 Feb. 150 1,155 End. bal. 1,260 End. bal. 6,180 Notes Receivable Interest Receivable 0 Beg. bal 0 1,700 Beg. bal. Feb. 290 Feb. 1 13 End, bal 1,700 End. bal. 13 Beg. bal. Feb. 17 Feb. 19a Accounts Payable 2.400 11.250 11.250 Feb. 5 2,400 500 Feb. 27 Beg. bal. Feb. 15a Unearned Revenue 4,900 4,900 End, bal 500 End. bal. Wages Payable Interest Payable Beg. bal. Beg. bal. 1.800 Feb. 29a 155 Feb. 290 End, bal. 1,900 End. bal. 155 Notes Payable 15,500 Contributed Capital 6.100 Beg. bal. Beg. bal. End. bal. 15.500 End. bal. 6.100 Dividends Declared Retained Earnings 4,370 Beg bal 0 Seg. bal. Feb. 28 550 End. bal. 4,370 End. bal. 550 Sales Revenue Sales Returns & Allowances 0 Beg bal 0 Beg. bal. Feb. 150 2,400 19,200 Feb. 10a 4,900 Feb. 15a End. bal. 24,100 End. bal. 2,400 Sales Discounts Cost of Goods Sold 0 Beg. bal 0 Beg, bal. Feb. 100 Feb. 196 120 9,695 1,155 Feb. 150 End. bal. 120 End. bal. 8,540 Interest Revenue Bad Debt Expense 0 Beg bal 0 Beg. bal. Feb. 290 13 Feb. 290 850 End. bal. 13 End. bal. 850 Interest Expense Insurance Expense 0 0 Beg, bal Feb. 2 Beg. bal. Feb. 290 600 155 Rent Expense 0 Beg. bal. Feb. 19a Beg, bal Feb. 27 Utility Expense 0 500 2.400 End. bal. 2.400 End, bal. 500 Wages Expense 0 Beg, bal Feb. 16 Feb. 29a 1,900 1.900 3,800Step by Step Solution
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