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 02/02 Jo WWC paid a $500 insurance premium covering the month of February. The amount paid is recorded directly as an expense. 02/05 205 An additional 200 units of inventory are purchased on account by WWC for $15,000 - terms 2/15, n30. 205 WWC paid Federal Express $200 to have the 200 units of inventory delivered overnight. Delivery occurred on 02/06. 2 Sales of 170 units of inventory occurred during the period of 02/07 - 02/10. The sales terms are 2/10, net 30. 5. The 40 units that were paid for in advance and recorded in January are delivered to the customer. 30 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 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 $3,100. Paid in full the amount owed for the 2/05 purchase of inventory. WWC records 02/17 purchase discounts in the current period rather than as a reduction of inventory costs. 02/18 Wrote off a customer's account in the amount of $1,450. 24 $4,400 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. Collected $8,900 of customers' Accounts Receivable. Of the $8,900, the 02/19 discount was taken by customers on $5,000 of account balances; therefore WWC received less than $8.900