Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Wally's Widget Company (wwc) incorporated near the end of 2011. Operations began in J WWC prepares adjusting entries and financial statements at the end of
Wally's Widget Company (wwc) incorporated near the end of 2011. Operations began in J WWC prepares adjusting entries and financial statements at the end of eoch mont at the end of January ore as folfows enuary of 2012 h. Bolances in the accounts Cash Accounts Receivable Allowance for Doubtful Accounts$ (1600 Inventory (30 units) s5.050 $ 11750 Accounts Payoble (Jan R 2700 $ 13.000 s 6.400 Retoined Earnings - Feb 1 2012S6.27o Doubtful AccoutS 11750 Accounrevenue (25 units) Notes Payable $ 2.550 Contributed Copital WWC estoblishes a policy that it will sell nventory at $170 per unit In January, WWC received e $5.050 advance for 25 units, as reflected in WWC's February 1 inventory balance consisted of 30 units ar a total coat of $2550 WWC's note povable accrues interest ata 12% annual rate WWC will use the FIFO inventory method and record CoGs on o p ned Revenda record GOcs on a perpetuol basis February T 02/01 Inclucied in WWC's February 1 Accounts Receiveble balance is e 520 cti ceis : 9 000 didgount from Kit K WWC customer: Kit Kat is heving cash flow problems and connot pey its belance of this time. wWc arranges with Kit Kat to convert the $2/000 balance to e note, and Kit Kat signg s 6-month note.at 12% annual interest. The principal and all interest il e clie an payable to VN on 2012. 02/02 wWC poid o $750 insurance premium covering the month of F 02/05 An accitional 190 units of in 02/05 wwc paid Federal Exprese $360 to have the 130 unts of inventory celivered overmight Delivery Th corded dlirectly a n30 occurred on 02/06 2/10, net 30. Cun by WWC for $13.500 terms 215 LE 2/10 Sales of 150 units of inventory occu 0215 The 25 units thot were paid for in acivance ondi recordled in Januery ore deliveredi to the custom 0215 20 units of the inventory that haci been solci on 2/10 aie retuimeg o WWIC The units cre not d curing the peiod of 02/0 damaged and con be resold. Therefore, they arereturned to inventory Assuine thne /hits are from the 205 purchas 02/16 WWC pays the first 2 weeks woges to the emplayees. The rotal pnid s s2/200 02/17 Poid in full the amount owed for the 2/05 purchage of inventony wwc recaide purchase ciliscounta 02/18 Wrote off a customer's account in the cmount of $17O 0219 55.400 of rent for January anc February was paid. Becauige e 02/19 Collected $9.400 of customers Accounsa Receivable Ofthe 59400 che discodint swaa zaker by 02/26 WWC recovered $540 cash from the customer wlhose accou in the current period rather thansa reduction of inventory costs February portion of the payment is chorged cirectly to expenge customers on $6,000 of account balances therefore WwdC recaived leae than gduaio 02/18 IPID 02/27 A $650 utility bill for February arrived. It is cue on March 15 and will be paid them 02/28 wWC decisredi and paidi a $850 cash civicend
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started