Wills Widget Company (WWC) incorporated near the end of 2017. Operations began in January of 2018. 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:

Account Title	Dr	Cr
Cash	21,170
Accounts Receivable	12,200
Allowance for Doubtful Accounts		1,750
Inventory (45 units)	3,825
Unearned Revenue (40 units)		5,200
Accounts Payable (Jan Rent)		3,000
Notes Payable		14,500
Contributed Capital		6,700
Retained Earnings Feb 1, 2012		6,045

Additional Information you need to know about WWC:

	WWC establishes a policy that it will sell inventory at $165 per unit.
	In January, WWC received a $5,200 advance for 40 units, as reflected in Unearned Revenue.
	WWCs February 1 inventory balance consisted of 45 units at a total cost of $3,825.
	WWCs note payable accrues interest at a 12% annual rate.
	WWC will use the FIFO inventory method and record COGS on a perpetual basis.

Below are transactions for February 2018:

Record Journal Entries for following transactions:
02/01	Included in WWCs 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 9% annual interest. The principal and all interest will be due and payable to WWC on August 1, 2012.
02/02	WWC paid a $900 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 $450 to have the 150 units of inventory delivered overnight. Delivery occurred on 02/06. (Hint--Recall company uses perpetual inventory system, record transportation fees as part of inventory costsdebit to inventory)
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. (Hint --Recall company follows FIFO. What are the COGS of 120 sold units?)
02/15	The 40 units that were paid for in advance and recorded in January are delivered to the customer. (Hint --Recall WWC follows FIFO. What are the COGS of 40 sold units?)
02/15	10 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 $2,500.
02/17	Paid in full the amount owed for the 2/05 purchase of inventory. WWC records purchase discounts as a reduction of inventory costs (credit to inventory).
02/18	Wrote off a customers account in the amount of $1,850.
02/19	$6,000 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 $9,700 of customers Accounts Receivable. Of the $9,700, the discount was taken by customers on $6,500 of account balances; therefore WWC received less than $9,700.
02/26	WWC recovered $570 cash from the customer whose account had previously been written off (see 02/18).
02/27	A $800 utility bill for February arrived. It is due on March 15 and will be paid then.
02/28	WWC declared and paid a $650 cash dividend.

Record Adjusting Entries:

02/29	Record the $2,500 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 estimates the bad debts expenses for this month is $568.
02/29	Record February interest expense accrued on the note payable (HintRecall companys note payable accrues interest at a 12% annual rate and Note payable is $14,500)
02/29	Record one months interest earned Kit Kats note (see transaction on 02/01).

1. Prepare all February journal entries and adjusting entries

Date	General Journal	Debit	Credit
Feb. 1
Feb. 2
Feb. 5
Feb. 6
Feb. 10a
Record Sales Revenue of 120 sold units
Feb. 10b
Record COGS of 120 sold units
Feb. 15a
Record Sales Revenue of 40 sold units
Feb. 15b
Record COGS of 40 sold units
Feb. 15c
Record Returned 10 units (Inventory)
Feb. 15d
Record Returned 10 units (Sales Returns and Allowance)
Feb. 16
Feb. 17
Feb. 18
Feb. 19a
Record Rent Payment
Feb. 19b
Record Sales discount
Feb. 26a
Feb. 26b
Feb. 27
Feb. 28
AJE:
Feb. 29a
Record Wages
Feb. 29b
Record Bad Debts
Feb. 29c
Record Interests (on N/P)
Feb. 29d
Record Interests (on N/R)

	2.	Prepare the financial statements at the end of February.
WWC, Inc.
Income Statement
For the Month Ended February 29
Revenues
Sales Revenue
Less: Sales Returns and Allowances
Less: Sales Discounts
Net Sales
Cost of Goods Sold
Gross Profit
Expenses
Wages Expense
Utility Expense
Bad Debt Expense
Insurance Expense
Rent Expense
Interest Expense
Total Expenses
Interest Revenue
Net Income

WWC, Inc.
Statement of Retained Earnings
For the Month Ended February 29
Retained Earnings, Beginning of Period
Add: Net Income
Less: Dividends
Retained Earnings, End of Period

WWW, Inc.
Balance Sheet
At February 29
Assets			Liabilities
Current Assets			Current Liabilities
Cash			Accounts Payable
Accounts Receivable			Wages Payable
Allowance for Doubtful Accounts			Interest Payable
Inventory
Notes Receivable
Interest Receivable
Total Current Assets			Total Current Liabilities
			Notes Payable
			Total liabilities
			Stockholders' Equity
			Contributed Capital
			Retained Earnings
			Total Stockholders' Equity
Total Assets			Total Liabilities and Stockholders' Equity