Question

Will’s Widget Company (WWC) incorporated near the end of 2017. Operations began in January of 2018....

Will’s 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 3,000
Notes Payable 14,500
Contributed Capital 6,700
Retained Earnings - Feb 1, 2018 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.

WWC’s February 1 inventory balance consisted of 45 units at a total cost of $3,825.

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.

Below are transactions for February 2018:

Record Journal Entries for following transactions:

02/01

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 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 costs—debit 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 customer’s 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 (Hint—Recall company’s note payable accrues interest at a 12% annual rate and Note payable is $14,500)

02/29

Record one month’s interest earned Kit Kat’s note (see transaction on 02/01).

. Prepare all February journal entries and adjusting entries

Date

General Journal

Debit

Credit

Feb. 1

Notes Receivable

$1500

            Accounts Receivable- Kit Kat

$1500

Feb. 2

Insurance Expense

$900

Cash

$900

Feb. 5

Inventory

$11,250

Accounts Payable

$11,250

Feb. 6

Inventory

$450

Cash

$450

Feb. 10a

Accounts Receivable

$19,800

Record Sales Revenue of 120 sold units

            Sales Revenue

$19,800

Feb. 10b

Cost of Goods Sold

$9,450

Record COGS of 120 sold units

            Inventory

$9,450

Feb. 15a

Unearned Revenue

$5,200

Record Sales Revenue of 40 sold units

            Sales Revenue

$5,200

Feb. 15b

Cost of Goods Sold

$3,120

Record COGS of 40 sold units

            Sales Revenue

$3,120

Feb. 15c

Inventory

$780

Record Returned 10 units (Inventory)

            Cost of Goods Sold

$780

Feb. 15d

Sales Returns and Allowance

$1,650

Record Returned 10 units (Sales Returns and Allowance)

            Accounts Receivable

$1,650

Feb. 16

Wages Expense

$2,500

            Cash

$2,500

Feb. 17

Accounts Payable

$11,250

            Inventory

$11,250

Feb. 18

Allowance for Doubtful Accounts

$1,850

            Accounts Receivable

$1,850

Feb. 19a

Accounts Payable

$3,000

Record Rent Payment

Rent Expense

$3,000

            Cash

$6,000

Feb. 19b

Cash

$6,500

Record Sales discount

            Sales Discount

$3,200

            Accounts Receivable

$9,700

Feb. 26a

Accounts Receivable

$570

            Allowance for Doubtful             Accounts

$570

Feb. 26b

Cash

$570

            Accounts Receivable

$570

Feb. 27

Utility Expense

$800

            Accrued Utilities

$800

Feb. 28

Dividend

$650

            Cash

$650

AJE:

Feb. 29a

Wages Expense

$2500

Record Wages

            Wages Payable

$2500

Feb. 29b

Bad Debt Expense

$568

Record Bad Debts

            Allowance for Doubtful             Accounts

$568

Feb. 29c

Interest Expense

$ 145

Record Interests (on N/P)

            Interest Payable

$145

Feb. 29d

Interest Receivable

$22.50

Record Interests (on N/R)

            Interest Revenue

$22.50

2.

Prepare the financial statements at the end of February.

WWC, Inc.

Income Statement

For the Month Ended February 29

Revenues

Sales Revenue

$28,120

Less: Sales Returns and Allowances

$1,650

Less: Sales Discounts

$3,200

Net Sales

$23,270

Cost of Goods Sold

$12,570

Gross Profit

$10,700

Expenses

Wages Expense

$2,500

Utility Expense

$800

Bad Debt Expense

$568

Insurance Expense

$900

Rent Expense

$3,000

Interest Expense

$145

Total Expenses

7913

Interest Revenue

$22.50

Net Income

$2,764.50

WWC, Inc.

Statement of Retained Earnings

For the Month Ended February 29

Retained Earnings, Beginning of Period

$6045

Add: Net Income

2,764.50  

Less: Dividends

-650

Retained Earnings, End of Period

$8159.50

WWW, Inc.

Balance Sheet

At February 29

Assets

Liabilities

Current Assets

Current Liabilities

Cash

17,740

Accounts Payable

0

Accounts Receivable

17,300

Wages Payable

2500

Allowance for Doubtful Accounts

1038

Interest Payable

145

Inventory

-4395

Notes Receivable

1500

Interest Receivable

22.50

Total Current Assets

33,205.50

Total Current Liabilities

2645

Notes Payable

14,500

Total liabilities

17145

Stockholders' Equity

Contributed Capital

6700

Retained Earnings

8159.50

Total Stockholders' Equity

14859.50

Total Assets

33,205.50

Total Liabilities and Stockholders' Equity

32004.50

I NEED SOMEONE TO PLEASE HELP ME FIX THE ENTIRE DOCUMENT. I DO NOT KNOW WHAT I AM DOING WRONG. THANK YOU

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