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	$	18,920		Unearned Revenue (30 units)	$	4,450
Accounts Receivable	$	9,950		Accounts Payable (Jan Rent)	$	1,500
Allowance for Doubtful Accounts	$	(1,000)		Notes Payable	$	14,500
Inventory (35 units)	$	2,800		Contributed Capital	$	5,200
				Retained Earnings Feb 1, 2012	$	5,020

	WWC establishes a policy that it will sell inventory at $165 per unit.
	In January, WWC received a $4,450 advance for 30 units, as reflected in Unearned Revenue.
	WWCs February 1 inventory balance consisted of 35 units at a total cost of $2,800.
	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 12% 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 130 units of inventory are purchased on account by WWC for $9,750 terms 2/15, n30.
02/05	WWC paid Federal Express $260 to have the 130 units of inventory delivered overnight. Delivery occurred on 02/06.
02/10	Sales of 100 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 $2,400.
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 $1,100.
02/19	$3,000 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 $8,200 of customers Accounts Receivable. Of the $8,200, the discount was taken by customers on $4,500 of account balances; therefore WWC received less than $8,200.
02/26	WWC recovered $420 cash from the customer whose account had previously been written off (see 02/18).
02/27	A $600 utility bill for February arrived. It is due on March 15 and will be paid then.
02/28	WWC declared and paid a $800 cash dividend.

Adjusting Entries:

02/29	Record the $2,400 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).

1-b.	Post all February entries (transactions and adjustments) to the T-accounts.

No. Date General Journal Debit Credit 1 Feb. 1 Accounts Payable 1700 Accounts Receivable 1700 2 Feb. 2 Insurance Expense 600 Cash 600 3 Feb. 5 9750 Accounts Payable 9750 4. Feb. 6 Inventory 260 Cash 260 5 Feb. 10a Accounts Receivable 16500 Sales Revenue (165 * 100) 16500 6 Feb. 10b Cost of Goods Sold * [(3580) + (6577) 7805 Inventory 7805 Feb. 15a Unearned Revenue 4450 Sales Revenue 4450 8 Feb 15b Cost of Goods Sold (30 * 77) 2310 Inventory 2310 9 Feb 15c Inventory (15 * 77) 1155 Cost of Goods sold 1155 10 Feb 15d Sales Returns and Allowance 2475 Accounts Receivable (15 * 165) 2475 11 Feb. 16 Wages Expense 2400 Cash 2400 12 Feb-17 Accounts Payable 9750 Cash 9555 Inventory (9750 * 2%) 195 13 Feb-18 Allowance for Doubtful Accounts 1100 Accounts Receivable 1100 14 Feb 19a Accounts Payable 1500 Rent Expense 1500 Cash 3000 15 Feb. 19b Cash 8110 Sales Discounts (4500 * 2%) 90 Accounts Receivable 8200 16 Feb. 26a Accounts Receivable 420 420 Allowance for Doubtful Accounts 420 17 Feb. 26b Cash 420 Accounts Receivable 420 18 Feb. 27 Utility Expense 600 Accounts Payable 600 19 Feb. 28 Dividends Declared 800 Cash 800 20 Feb. 29a Wages Expense 2400 Accounts Payable 2400 21 Feb. 29b Bad Debt Expense ** 718 Allowance or Doubtful Accounts 22 Feb. 29c Interest Expense (14500 * 12% * 1/12) 145 Interest Payable 145 23 Feb. 29d Interest Receivable (1700 * 12% * 1/12) 17 Interest Revenue Cash Accounts Receivable Beg. bal. Beg. bal. End. bal. End. bal. Inventory Allowance for Doubtful Accounts Beg. bal. Beg. bal. End. bal. End. bal. Notes Receivable Interest Receivable Beg. bal. Beg. bal. End. bal. End. bal. Accounts Payable Unearned Revenue Beg. bal. Beg. bal. End. bal. End. bal. Wages Payable Interest Payable Beg. bal. Beg. bal. End. bal. End. bal. Notes Payable Contributed Capital Beg. bal. Beg. bal. End. bal. End. bal. Retained Earnings Dividends Declared Beg. bal. Beg. bal. Sales Revenue Sales Returns & Allowances Beg. bal. Beg. bal. End. bal. End. bal. Sales Discounts Cost of Goods Sold Beg. bal. Beg. bal. End. bal. End. bal. Interest Revenue Bad Debt Expense Beg. bal. Beg. bal. End. bal. End. bal. Insurance Expense Interest Expense Beg. bal. Beg. bal. Rent Expense Utility Expense Beg. bal. Beg. bal. End. bal. End. bal. Wages Expense Beg. bal