Wally’s Widget Company (WWC) incorporated near the end of 2011. Operations began in January of 2012. 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: Cash $ 20,270 Unearned Revenue (30 units) $ 4,900 Accounts Receivable $ 11,300 Accounts Payable (Jan Rent) $ 2,400 Allowance for Doubtful Accounts $ (1,450) Notes Payable $ 15,500 Inventory (35 units) $ 3,150 Contributed Capital $ 6,100 Retained Earnings – Feb 1, 2012 $ 4,370 • WWC establishes a policy that it will sell inventory at $160 per unit. • In January, WWC received a $4,900 advance for 30 units, as reflected in Unearned Revenue. • WWC’s February 1 inventory balance consisted of 35 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 02/01 Included in WWC’s February 1 Accounts Receivable balance is a $1,700 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 $1,700 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 $600 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 $300 to have the 150 units of inventory delivered overnight. Delivery occurred on 02/06. 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. 02/15 The 30 units that were paid for in advance and recorded in January are delivered to the customer. 02/15 15 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 $1,900. 02/17 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. 02/18 Wrote off a customer’s account in the amount of $1,550. 02/19 $4,800 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 $9,100 of customers’ Accounts Receivable. Of the $9,100, the discount was taken by customers on $6,000 of account balances; therefore WWC received less than $9,100. 02/26 WWC recovered $510 cash from the customer whose account had previously been written off (see 02/18). 02/27 A $500 utility bill for February arrived. It is due on March 15 and will be paid then. 02/28 WWC declared and paid a $550 cash dividend. Adjusting Entries: 02/29 Record the $1,900 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 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 Kat’s note (see 02/01).
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.
In: Accounting
|
Wally’s Widget Company (WWC) incorporated near the end of 2011. Operations began in January of 2012. 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: |
| Cash | $ | 21,470 | Unearned Revenue (25 units) | $ | 5,300 | ||
| Accounts Receivable | $ | 12,500 | Accounts Payable (Jan Rent) | $ | 3,200 | ||
| Allowance for Doubtful Accounts | $ | (1,850) | Notes Payable | $ | 15,500 | ||
| Inventory (30 units) | $ | 2,400 | Contributed Capital | $ | 6,900 | ||
| Retained Earnings – Feb 1, 2012 | $ | 3,620 | |||||
| • | WWC establishes a policy that it will sell inventory at $165 per unit. |
| • | In January, WWC received a $5,300 advance for 25 units, as reflected in Unearned Revenue. |
| • | WWC’s February 1 inventory balance consisted of 30 units at a total cost of $2,400. |
| • | 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 | |
| 02/01 |
Included in WWC’s February 1 Accounts Receivable balance is a $1,700 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 $1,700 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 $600 insurance premium covering the month of February. The amount paid is recorded directly as an expense. |
| 02/05 |
An additional 170 units of inventory are purchased on account by WWC for $12,750 – terms 2/15, n30. |
| 02/05 |
WWC paid Federal Express $510 to have the 170 units of inventory delivered overnight. Delivery occurred on 02/06. |
| 02/10 |
Sales of 140 units of inventory occurred during the period of 02/07 – 02/10. The sales terms are 2/10, net 30. |
| 02/15 |
The 25 units that were paid for in advance and recorded in January are delivered to the customer. |
| 02/15 |
20 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 $2,700. |
| 02/17 |
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. |
| 02/18 | Wrote off a customer’s account in the amount of $1,950. |
| 02/19 |
$6,400 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. |
| 02/19 |
Collected $9,900 of customers’ Accounts Receivable. Of the $9,900, the discount was taken by customers on $7,500 of account balances; therefore WWC received less than $9,900. |
| 02/26 |
WWC recovered $590 cash from the customer whose account had previously been written off (see 02/18). |
| 02/27 |
A $900 utility bill for February arrived. It is due on March 15 and will be paid then. |
| 02/28 | WWC declared and paid a $850 cash dividend. |
| Adjusting Entries: |
| 02/29 |
Record the $2,700 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 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 Kat’s note (see 02/01).
|
In: Accounting
|
Wally’s Widget Company (WWC) incorporated near the end of 2011. Operations began in January of 2012. 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: |
| Cash | $ | 20,420 | Unearned Revenue (35 units) | $ | 4,950 | ||
| Accounts Receivable | $ | 11,450 | Accounts Payable (Jan Rent) | $ | 2,500 | ||
| Allowance for Doubtful Accounts | $ | (1,500) | Notes Payable | $ | 16,000 | ||
| Inventory (40 units) | $ | 3,600 | Contributed Capital | $ | 6,200 | ||
| Retained Earnings – Feb 1, 2012 | $ | 4,320 | |||||
| • | WWC establishes a policy that it will sell inventory at $145 per unit. |
| • | In January, WWC received a $4,950 advance for 35 units, as reflected in Unearned Revenue. |
| • | WWC’s February 1 inventory balance consisted of 40 units at a total cost of $3,600. |
| • | 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 | |
| 02/01 |
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 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 9% 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 |
An additional 160 units of inventory are purchased on account by WWC for $12,000 – terms 2/15, n30. |
| 02/05 |
WWC paid Federal Express $320 to have the 160 units of inventory delivered overnight. Delivery occurred on 02/06. |
| 02/10 |
Sales of 130 units of inventory occurred during the period of 02/07 – 02/10. The sales terms are 2/10, net 30. |
| 02/15 |
The 35 units that were paid for in advance and recorded in January are delivered to the customer. |
| 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 $2,000. |
| 02/17 |
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. |
| 02/18 | Wrote off a customer’s account in the amount of $1,600. |
| 02/19 |
$5,000 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 $9,200 of customers’ Accounts Receivable. Of the $9,200, the discount was taken by customers on $6,500 of account balances; therefore WWC received less than $9,200. |
| 02/26 |
WWC recovered $520 cash from the customer whose account had previously been written off (see 02/18). |
| 02/27 |
A $550 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. |
| Adjusting Entries: |
| 02/29 |
Record the $2,000 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 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 Kat’s note (see 02/01).
|
In: Accounting
|
Wally?s Widget Company (WWC) incorporated near the end of 2011. Operations began in January of 2012. 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: |
| Cash | $ | 18,920 | Unearned Revenue (30 units) | $ | 4,450 | ||
| Accounts Receivable | $ | 9,950 | Accounts Payable (Jan Rent) | $ | 1,500 | ||
| Allowance for Doubtful Accounts | $ | (1,000) | Notes Payable | $ | 14,500 | ||
| Inventory (35 units) | $ | 2,800 | Contributed Capital | $ | 5,200 | ||
| Retained Earnings ? Feb 1, 2012 | $ | 5,020 | |||||
| ? | WWC establishes a policy that it will sell inventory at $165 per unit. |
| ? | In January, WWC received a $4,450 advance for 30 units, as reflected in Unearned Revenue. |
| ? | WWC?s February 1 inventory balance consisted of 35 units at a total cost of $2,800. |
| ? | 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 | |
| 02/01 |
Included in WWC?s February 1 Accounts Receivable balance is a $1,700 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 $1,700 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. |
| 02/02 |
WWC paid a $600 insurance premium covering the month of February. The amount paid is recorded directly as an expense. |
| 02/05 |
An additional 130 units of inventory are purchased on account by WWC for $9,750 ? terms 2/15, n30. |
| 02/05 |
WWC paid Federal Express $260 to have the 130 units of inventory delivered overnight. Delivery occurred on 02/06. |
| 02/10 |
Sales of 100 units of inventory occurred during the period of 02/07 ? 02/10. The sales terms are 2/10, net 30. |
| 02/15 |
The 30 units that were paid for in advance and recorded in January are delivered to the customer. |
| 02/15 |
15 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 $2,400. |
| 02/17 |
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. |
| 02/18 | Wrote off a customer?s account in the amount of $1,100. |
| 02/19 |
$3,000 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 $8,200 of customers? Accounts Receivable. Of the $8,200, the discount was taken by customers on $4,500 of account balances; therefore WWC received less than $8,200. |
| 02/26 |
WWC recovered $420 cash from the customer whose account had previously been written off (see 02/18). |
| 02/27 |
A $600 utility bill for February arrived. It is due on March 15 and will be paid then. |
| 02/28 | WWC declared and paid a $800 cash dividend. |
| Adjusting Entries: |
| 02/29 |
Record the $2,400 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 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 Kat?s note (see 02/01).
|
In: Accounting
Wally’s Widget Company (WWC) incorporated near the end of 2011. Operations began in January of 2012. 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: Cash $ 18,770 Unearned Revenue (25 units) $ 4,400 Accounts Receivable $ 9,800 Accounts Payable (Jan Rent) $ 1,400 Allowance for Doubtful Accounts $ (950) Notes Payable $ 14,000 Inventory (30 units) $ 2,400 Contributed Capital $ 5,100 Retained Earnings – Feb 1, 2012 $ 5,120 • WWC establishes a policy that it will sell inventory at $160 per unit. • In January, WWC received a $4,400 advance for 25 units, as reflected in Unearned Revenue. • WWC’s February 1 inventory balance consisted of 30 units at a total cost of $2,400. • 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 02/01 Included in WWC’s February 1 Accounts Receivable balance is a $1,600 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 $1,600 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. 02/02 WWC paid a $550 insurance premium covering the month of February. The amount paid is recorded directly as an expense. 02/05 An additional 120 units of inventory are purchased on account by WWC for $9,000 – terms 2/15, n30. 02/05 WWC paid Federal Express $240 to have the 120 units of inventory delivered overnight. Delivery occurred on 02/06. 02/10 Sales of 90 units of inventory occurred during the period of 02/07 – 02/10. The sales terms are 2/10, net 30. 02/15 The 25 units that were paid for in advance and recorded in January are delivered to the customer. 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 $2,300. 02/17 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. 02/18 Wrote off a customer’s account in the amount of $1,050. 02/19 $2,800 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 $8,100 of customers’ Accounts Receivable. Of the $8,100, the discount was taken by customers on $4,000 of account balances; therefore WWC received less than $8,100. 02/26 WWC recovered $410 cash from the customer whose account had previously been written off (see 02/18). 02/27 A $550 utility bill for February arrived. It is due on March 15 and will be paid then. 02/28 WWC declared and paid a $700 cash dividend. Adjusting Entries: 02/29 Record the $2,300 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 determines 10% 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 Kat’s note (see 02/01). Record the Following Journal Entries:
In: Accounting
|
Wally’s Widget Company (WWC) incorporated near the end of 2011. Operations began in January of 2012. 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: |
| Cash | $ | 18,770 | Unearned Revenue (25 units) | $ | 4,400 | ||
| Accounts Receivable | $ | 9,800 | Accounts Payable (Jan Rent) | $ | 1,400 | ||
| Allowance for Doubtful Accounts | $ | (950) | Notes Payable | $ | 14,000 | ||
| Inventory (30 units) | $ | 2,400 | Contributed Capital | $ | 5,100 | ||
| Retained Earnings – Feb 1, 2012 | $ | 5,120 | |||||
| • | WWC establishes a policy that it will sell inventory at $160 per unit. |
| • | In January, WWC received a $4,400 advance for 25 units, as reflected in Unearned Revenue. |
| • | WWC’s February 1 inventory balance consisted of 30 units at a total cost of $2,400. |
| • | 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 | |
| 02/01 |
Included in WWC’s February 1 Accounts Receivable balance is a $1,600 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 $1,600 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. |
| 02/02 |
WWC paid a $550 insurance premium covering the month of February. The amount paid is recorded directly as an expense. |
| 02/05 |
An additional 120 units of inventory are purchased on account by WWC for $9,000 – terms 2/15, n30. |
| 02/05 |
WWC paid Federal Express $240 to have the 120 units of inventory delivered overnight. Delivery occurred on 02/06. |
| 02/10 |
Sales of 90 units of inventory occurred during the period of 02/07 – 02/10. The sales terms are 2/10, net 30. |
| 02/15 |
The 25 units that were paid for in advance and recorded in January are delivered to the customer. |
| 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 $2,300. |
| 02/17 |
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. |
| 02/18 | Wrote off a customer’s account in the amount of $1,050. |
| 02/19 |
$2,800 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 $8,100 of customers’ Accounts Receivable. Of the $8,100, the discount was taken by customers on $4,000 of account balances; therefore WWC received less than $8,100. |
| 02/26 |
WWC recovered $410 cash from the customer whose account had previously been written off (see 02/18). |
| 02/27 |
A $550 utility bill for February arrived. It is due on March 15 and will be paid then. |
| 02/28 | WWC declared and paid a $700 cash dividend. |
| Adjusting Entries: |
| 02/29 |
Record the $2,300 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 determines 10% 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 Kat’s note (see 02/01). Record the Journal Entries for: Feb. 10, Feb. 15, Feb. 29 |
In: Accounting
Required information
[The following information applies to the questions displayed below.]
|
Wally’s Widget Company (WWC) incorporated near the end of 2011. Operations began in January of 2012. 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: |
| Cash | $ | 20,720 | Unearned Revenue (25 units) | $ | 5,050 | ||
| Accounts Receivable | $ | 11,750 | Accounts Payable (Jan Rent) | $ | 2,700 | ||
| Allowance for Doubtful Accounts | $ | (1,600) | Notes Payable | $ | 13,000 | ||
| Inventory (30 units) | $ | 2,550 | Contributed Capital | $ | 6,400 | ||
| Retained Earnings – Feb 1, 2012 | $ | 6,270 | |||||
| • | WWC establishes a policy that it will sell inventory at $170 per unit. |
| • | In January, WWC received a $5,050 advance for 25 units, as reflected in Unearned Revenue. |
| • | WWC’s February 1 inventory balance consisted of 30 units at a total cost of $2,550. |
| • | 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 | |
| 02/01 |
Included in WWC’s February 1 Accounts Receivable balance is a $2,000 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 $2,000 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. |
| 02/02 |
WWC paid a $750 insurance premium covering the month of February. The amount paid is recorded directly as an expense. |
| 02/05 |
An additional 180 units of inventory are purchased on account by WWC for $13,500 – terms 2/15, n30. |
| 02/05 |
WWC paid Federal Express $360 to have the 180 units of inventory delivered overnight. Delivery occurred on 02/06. |
| 02/10 |
Sales of 150 units of inventory occurred during the period of 02/07 – 02/10. The sales terms are 2/10, net 30. |
| 02/15 |
The 25 units that were paid for in advance and recorded in January are delivered to the customer. |
| 02/15 |
20 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 $2,200. |
| 02/17 |
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. |
| 02/18 | Wrote off a customer’s account in the amount of $1,700. |
| 02/19 |
$5,400 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. |
| 02/19 |
Collected $9,400 of customers’ Accounts Receivable. Of the $9,400, the discount was taken by customers on $6,000 of account balances; therefore WWC received less than $9,400. |
| 02/26 |
WWC recovered $540 cash from the customer whose account had previously been written off (see 02/18). |
| 02/27 |
A $650 utility bill for February arrived. It is due on March 15 and will be paid then. |
| 02/28 | WWC declared and paid a $850 cash dividend. |
| Adjusting Entries: |
| 02/29 |
Record the $2,200 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 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 Kat’s note (see 02/01). |
| Required: |
| 1-a. |
Prepare all February journal entries and adjusting entries. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) |
In: Accounting
Required information
[The following information applies to the questions displayed below.]
|
Wally’s Widget Company (WWC) incorporated near the end of 2011. Operations began in January of 2012. 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: |
| Cash | $ | 20,720 | Unearned Revenue (25 units) | $ | 5,050 | ||
| Accounts Receivable | $ | 11,750 | Accounts Payable (Jan Rent) | $ | 2,700 | ||
| Allowance for Doubtful Accounts | $ | (1,600) | Notes Payable | $ | 13,000 | ||
| Inventory (30 units) | $ | 2,550 | Contributed Capital | $ | 6,400 | ||
| Retained Earnings – Feb 1, 2012 | $ | 6,270 | |||||
| • | WWC establishes a policy that it will sell inventory at $170 per unit. |
| • | In January, WWC received a $5,050 advance for 25 units, as reflected in Unearned Revenue. |
| • | WWC’s February 1 inventory balance consisted of 30 units at a total cost of $2,550. |
| • | 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 | |
| 02/01 |
Included in WWC’s February 1 Accounts Receivable balance is a $2,000 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 $2,000 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. |
| 02/02 |
WWC paid a $750 insurance premium covering the month of February. The amount paid is recorded directly as an expense. |
| 02/05 |
An additional 180 units of inventory are purchased on account by WWC for $13,500 – terms 2/15, n30. |
| 02/05 |
WWC paid Federal Express $360 to have the 180 units of inventory delivered overnight. Delivery occurred on 02/06. |
| 02/10 |
Sales of 150 units of inventory occurred during the period of 02/07 – 02/10. The sales terms are 2/10, net 30. |
| 02/15 |
The 25 units that were paid for in advance and recorded in January are delivered to the customer. |
| 02/15 |
20 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 $2,200. |
| 02/17 |
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. |
| 02/18 | Wrote off a customer’s account in the amount of $1,700. |
| 02/19 |
$5,400 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. |
| 02/19 |
Collected $9,400 of customers’ Accounts Receivable. Of the $9,400, the discount was taken by customers on $6,000 of account balances; therefore WWC received less than $9,400. |
| 02/26 |
WWC recovered $540 cash from the customer whose account had previously been written off (see 02/18). |
| 02/27 |
A $650 utility bill for February arrived. It is due on March 15 and will be paid then. |
| 02/28 | WWC declared and paid a $850 cash dividend. |
| Adjusting Entries: |
| 02/29 |
Record the $2,200 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 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 Kat’s note (see 02/01). |
| 1-b. |
Post all February entries (transactions and adjustments) to the T-accounts. |
In: Accounting
Wally’s Widget Company (WWC) incorporated near the end of 2011. Operations began in January of 2012. 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: Cash $ 20,870 Unearned Revenue (30 units) $ 5,100 Accounts Receivable $ 11,900 Accounts Payable (Jan Rent) $ 2,800 Allowance for Doubtful Accounts $ (1,650) Notes Payable $ 13,500 Inventory (35 units) $ 2,975 Contributed Capital $ 6,500 Retained Earnings – Feb 1, 2012 $ 6,195 • WWC establishes a policy that it will sell inventory at $165 per unit. • In January, WWC received a $5,100 advance for 30 units, as reflected in Unearned Revenue. • WWC’s February 1 inventory balance consisted of 35 units at a total cost of $2,975. • 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 02/01 Included in WWC’s February 1 Accounts Receivable balance is a $1,300 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 $1,300 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. 02/02 WWC paid a $800 insurance premium covering the month of February. The amount paid is recorded directly as an expense. 02/05 An additional 190 units of inventory are purchased on account by WWC for $14,250 – terms 2/15, n30. 02/05 WWC paid Federal Express $380 to have the 190 units of inventory delivered overnight. Delivery occurred on 02/06. 02/10 Sales of 160 units of inventory occurred during the period of 02/07 – 02/10. The sales terms are 2/10, net 30. 02/15 The 30 units that were paid for in advance and recorded in January are delivered to the customer. 02/15 25 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 $2,300. 02/17 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. 02/18 Wrote off a customer’s account in the amount of $1,750. 02/19 $5,600 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 $9,500 of customers’ Accounts Receivable. Of the $9,500, the discount was taken by customers on $6,500 of account balances; therefore WWC received less than $9,500. 02/26 WWC recovered $550 cash from the customer whose account had previously 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 $950 cash dividend. Adjusting Entries: 02/29 Record the $2,300 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 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 Kat’s note (see 02/01).
NEEDED JOURNAL ENTRIES: Feb 15. Record the 25 units of inventory returned Feb 29. 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.
In: Accounting
Sam Walton and John Walton are two brothers who run
their father’s 20-year-old business “Walton Brothers
Auto Solutions”. They have two divisions in their business. Sam
looks after the workshop, where they service
new and used cars. Second division of business is retail of
automotive parts, which is looked after by John.
Retail shop is located just 20 minutes away from car service
workshop. Both sites are located in Sunshine
suburb of Melbourne. From last 2-3 years their business has been
growing at a very fast pace.
Their business continues to use traditional means of reporting and
heavily relies on paper based reporting
mechanism. However, as business is expanding fast so it is becoming
difficult to keep up with the pace of
reporting requirements, need of timely information primarily in
relation to costing, pricing and sales revenue for
their business. Margaret Jones is their bookkeeper; she spends
considerable time for just maintaining the
books and journalising transactions in a traditional way. Many a
times payments to suppliers are delayed and
payments from customers are not received by due date. On some
occasions customers do not make payment
and Walton Brothers do not even chase all overdue payments in a
timely manner due to using traditional
recording and reporting mechanism. In last couple of years business
revenue has grown by more than 80%,
which then lead to increase in many expenses and other costs.
Walton Brothers are facing cash flow issues
and are finding it hard to maintain a reputation of reliable
operators.
Margaret advised Walton Brothers that they needed to improve their
accounting systems and not using
computerised accounting software was one of the issues.
REQUIREMENTS
• Conduct an online research and suggest at least two accounting
software that they can use. For both
software answer the followings:
o Explain how it will solve current problem
o Explain strengths and any weaknesses
o Explain cost to purchase and implement (software and hardware
cost both)
o How is using a Accounting software different from using existing
traditional Accounting
techniques
• Explain if any other computer based programme can be used to
substantiate Accounting software’s. If,
yes how can they be more effective then using the Accounting
software for daily Accounting processes
within an organisation.
In: Accounting