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 $19,970 Unearned Revenue (40 units) 4,800 Accounts Receivable $11,000 Accounts Payable (Jan Rent) 2,200 Allowance for Doubtful Accounts 14,500 $ $1,350) Notes Payable Inventory (45 units) $ 3,150 Contributed Capital 5,900 $ Retained Earnings - Feb 1 5,370 $ 2012 wWC establishes a policy that it will sell inventory at $165 per unit. In January, WWC received a $4,800 advance for 40 units, as reflected in Unearned Revenue. wwC's February 1 inventory balance consisted of 45 units at a total cost of $3,150 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 $1,500 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 $1,500 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. wWC paid a $500 insurance premium covering the month of February. The amount paid is recorded directly as an expense. An additional 200 units of inventory are purchased on account by wWC for $15,000-terms 2/15, n30. wWC paid Federal Express $200 to have the 200 units of inventory delivered 02/01 02/02 02/05 02/05 uarninht DalivaincCurrod .on 07/OG 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 $19,970 Unearned Revenue (40 units) 4,800 Accounts Receivable $11,000 Accounts Payable (Jan Rent) 2,200 Allowance for Doubtful Accounts 14,500 $ $1,350) Notes Payable Inventory (45 units) $ 3,150 Contributed Capital 5,900 $ Retained Earnings - Feb 1 5,370 $ 2012 wWC establishes a policy that it will sell inventory at $165 per unit. In January, WWC received a $4,800 advance for 40 units, as reflected in Unearned Revenue. wwC's February 1 inventory balance consisted of 45 units at a total cost of $3,150 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 $1,500 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 $1,500 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. wWC paid a $500 insurance premium covering the month of February. The amount paid is recorded directly as an expense. An additional 200 units of inventory are purchased on account by wWC for $15,000-terms 2/15, n30. wWC paid Federal Express $200 to have the 200 units of inventory delivered 02/01 02/02 02/05 02/05 uarninht DalivaincCurrod .on 07/OG
