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 (40 units) Unearned Revenue (35 $19,070 4,500 units) $ 10,100 Accounts Payable (Jan 1,600 Rent) $(1.050) Notes Payable $ 15,000 $3,200 Contributed Capital 5,300 $ Retained Earnings - Feb 1, $ 4,920 2012 WWC establishes a policy that it will sell Inventory at $170 per unit. + In January. WWC received a $4,500 advance for 35 units, as reflected in Unearned Revenue. . WWC's February 1 Inventory balance consisted of 40 units at a total cost of $3,200. 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 $1,800 account due from Kit Kat, a WWC customer. Kit Kat is having cash flow 2/01 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 10% 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 140 units of Inventory are purchased on account by WwC for $10,500 - terms 2/15,n30. 2/05 WWC pald Federal Express $420 to have the 140 units of Inventory delivered overnight. Delivery occurred on 02/06. 02/10 Sales of 110 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 20 units of the Inventory that had been sold on 2/10 are returned to 02/5 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 pald is $2,500. Pald in full the amount owed for the 2/05 purchase of Inventory. WwC 02/17 records 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 $1,150. $3.200 of rent for January and February was paid. Because all of the 02/19 rent will soon expire, the February portion of the payment is charged directly to expense. Collected $8,300 of customers' Accounts Receivable. Of the $8,300, the 02/19 discount was taken by customers on $5,000 of account balances: therefore WwC received less than $8,300. WWC recovered $430 cash from the customer whose account had previously been written off (see 02/18). 2/27A $650 utility bill for February arrived. It is due on March 15 and will be paid then. 02/28WWC declared and paid a $900 cash dividend. adjusting Entries: Record the $2,500 employee salary that is owed but will be paid March WWC decides to use the aging method to estimate uncollectible 02/29accounts. Wwc determines 8% of the ending balance is the appropriate end of February estimate of uncollectible accounts. 02/29Record February Interest expense accrued on the note payable. 02/26 22:29 View transaction list View journal entry worksheet No Date General Journal Feb. 1 Notes Receivable Accounts Receivable Credit Debit 1,800 1,800 2 Feb. 2 650 Insurance Expense Cash 650 3 Feb. 5 10,500 Inventory Accounts Payable 10,500 Feb. 6 420 Inventory Cash 420 5 Feb. 10a 18,700 Accounts Receivable Sales Revenue 18,700 Feb. 10b Cost of Goods Sold Inventory 4,500 Feb. 15a Unearned Revenue Sales Revenue 4,500 8 Feb. 15b 3,136 Cost of Goods Sold Inventory 9 Feb. 15c Inventory Cost of Goods Sold 10 Feb. 15d Sales Returns and Allowance Accounts Receivable 11 Feb. 16 2.500 Wages Expense Cash 2,500 12 Feb. 17 10.500 Accounts Payable Cash Sales Discounts 10,290 210 13 Feb. 18 Allowance for Doubtful Accounts Accounts Receivable 1,150 1,150 14 Feb. 19a Accounts Payable Rent Expense Cash 1,600 1,600 3,200 15 Feb. 19b Cash Sales Discounts Accounts Receivable 8.200 100 8,300 16 Feb. 26a 430 Accounts Receivable Allowance for Doubtful Accounts 430 17 Feb. 26b 430 Cash Accounts Receivable 430 18 Feb. 27 650 Utility Expense Accounts Payable 650 19 Feb. 28 900 Dividends Declared Cash 900 20 2,500 Feb. 29a Wages Expense Wages Payable 2,500 21 802 Feb. 29b Bad Debt Expense Allowance for Doubtful Accounts 802 22 Feb. 29c Interest Expense Interest Payable 150 150 23 15 Feb. 29d Interest Receivable Interest Revenue 15 Cash Accounts Receivable Beg. bal. 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