. 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 problems and 02/01 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 $10,500 - terms 2/15, n30. An additional 140 units of inventory are purchased on account by WwC for 02/05 WWC paid 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. .The 35 units that were paid for in advance and recorded in January are delivered 02/15 to the customer 20 units of the inventory that had been sold on 2/10 are returned to WWC. The 02/15 units are not damaged and can be resold. Therefore, they are returned to . 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 problems and 02/01 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 $10,500 - terms 2/15, n30. An additional 140 units of inventory are purchased on account by WwC for 02/05 WWC paid 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. .The 35 units that were paid for in advance and recorded in January are delivered 02/15 to the customer 20 units of the inventory that had been sold on 2/10 are returned to WWC. The 02/15 units are not damaged and can be resold. Therefore, they are returned to
