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Feb 10.a

• Record the sales of 120 units of inventory

Feb 10.b

• Record the cost of goods sold for 120 units.

Feb 15.a

• Record the unearned revenue for 40 units paid in advance.

Feb 15.b

• Record the cost of goods sold for 40 units.

Feb 15.c

• Record the 25 units of inventory returned

Feb 15.d

• Record the sales return and allowance.

Feb 16

• WWC pays the first 2 weeks wages to the employees. The total paid is $2,600.

Feb 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.

Feb 18

• Wrote off a customers account in the amount of $1,200.

Feb 19.a

• $3,400 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.

Feb 19.b

• Collected $8,400 of customers Accounts Receivable. Of the $8,400, the discount was taken by customers on $5,500 of account balances; therefore WWC received less than $8,400.

Feb 26.a

• Record the entry to reversal of allowance for doubtful accounts.

Feb 26.b

• Record the entry to recovered $440 cash from the customer.

Feb 27

• A $700 utility bill for February arrived. It is due on March 15 and will be paid then.

Feb 28

• WWC declared and paid a $400 cash dividend.

Feb 29.a

• Record the $2,600 employee salary that is owed but will be paid March 1.

Feb 29.b

• 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.

Feb 29.c

• Record February interest expense accrued on the note payable.

Feb 29.d

• Record one months interest earned Kit Kats note (see 02/01).

Wally's Widget Company (WWC) incorporated near the end of 2011. Operations began i January of 2012. WWC prepares adjusting entries and financial statements at the end each month. Balances in the accounts at the end of January are as follows: Cash Accounts Receivable Allowance for Doubtful Accounts 4,550 $19,220 Unearned Revenue (40 units) $ $10,250 Accounts Payable (Jan Rent) $ 1,700 15,500 $ (1,100) Notes Payable $ 5,400 $ 3,600 Contributed Capital Retained Earnings Feb 1, 4,820 $ 2012 Inventory (45 units) $ WWC establishes a policy that it will sell inventory at $175 per unit. In January, WWC received a $4,550 advance for 40 units, as reflected in Unearned Revenue. WWC's February 1 inventory balance consisted of 45 units at a total cost of $3,600. 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 $1,900 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 $1,900 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 WWC paid a $700 insurance premium covering the month of February. The 02/02 amount paid is recorded directly as an expense. 02/05 An additional 150 units of inventory are purchased on account by WWC for $9,000 terms 2/15, n30. 02/05 WWC paid Federal Express $600 to have the 150 units of inventory delivered overnight. Delivery occurred on 02/06. Sales of 120 units of inventory occurred during the period of 02/07 - 02/10. The 02/10 sales terms are 2/10, net 30. 02/15 The 40 units that were paid for in advance and recorded in January are delivered to the customer. 25 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 $2,600. 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 $1,200. $3,400 of rent for January and February was paid. Because all of the rent will 02/19 soon expire, the February portion of the payment is charged directly to expense. Collected $8,400 of customers' Accounts Receivable. Of the $8,400, the 02/19 discount was taken by customers on $5,500 of account balances; therefore WWC received less than $8,400. WWC recovered $440 cash from the customer whose account had previously 02/26 been written off (see 02/18). 02/27 A $700 utility bill for February arrived. It is due on March 15 and will be paid then. 02/28 WWC declared and paid a $400 cash dividend. Adjusting Entries: 02/29 Record the $2,600 employee salary that is owed but will be paid March 1. WWC decides to use the aging method to estimate uncollectible accounts. WWC 02/29 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 month's interest earned Kit Kats note (see 02/01). Journal entry worksheet 1 2 3 4 5 6 7 8 23 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 $1,900 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.. Note: Enter debits before credits. Date General Journal Debit Credit Feb. 1 Notes Receivable 1,900 Accounts Receivable 1,900 WWC paid a $700 insurance premium covering the month of February. The amount paid is recorded directly as an expense. Note: Enter debits before credits. Date General Journal Debit Credit Feb. 2 Insurance Expense 700 Cash 700 WWC paid Federal Express $600 to have the 150 units of inventory delivered overnight. Delivery occurred on 02/06. Note: Enter debits before credits. Date General Journal Debit Credit Feb. 6 Inventory 600 Cash 600 1-b. Post all February entries (transactions and adjustments) to the T-accounts. 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. End. bal. End. bal. Sales Revenue Sales Returns & Allowances Bea. bal. Bea. bal. Notes Payable Contributed Capital Beg. bal. Beg. bal. End. bal. End. bal. Retained Earnings Dividends Declared Beg. bal. Beg. bal. End. bal. End. bal. Sales Revenue Sales Returns & Allowances Bea. bal. Bea. 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. End. bal. End. bal. Rent Expense Utility Expense Beg. bal. Beg. bal. End. bal. End. bal. Wages Expense Beg. bal. 1-c. Prepare the financial statements at the end of February. (Balance Sheet only, items to be deducted must be indicated with a negative amount.) WWC, Inc. Income Statement Expenses WWC, Inc. Statement of Retained Earnings Retained Earnings, Beginning of Period Retained Earnings, End of Period WWW, Inc. Balance Sheet Assets Liabilities Current Assets Current Liabilities Total Current Assets Total Current Liabilities Total Current Assets Total Current Liabilities Total liabilities Stockholders' Equity Total Stockholders' Equity Total Assets Total Liabilities and Stockholders' Equity 2. Prepare all February 29 closing entries for WWC. Post to the T-Accounts in requirement 1-b. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list Journal entry worksheet Record the entry to close sales revenue, interest revenue, sales returns and allowances, sales discounts. Journal entry worksheet

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