QUESTION Westwood Corporation manufactures and sells drones; and provides high-end cinematography services to several major clients. All sales are made on credit. The company records its sales of drones and resulting receivables using the net method. The company’s financial year ends December 31. Year End Data (December 31, 2020) DR CR Accounts Receivable $329 740 Allowance for Doubtful Accounts $3 140 Sales Revenue $1 200 000 Sales Returns and Allowances $53 870 A. Prepare the journal entry to record bad debt expense assuming Westwood Corporation estimates bad debts at 2% of net sales on December 31, 2020. December 31, 2020 DRAnswer $Answer CRAnswer $Answer B. Prepare the journal entry to record bad debt expense assuming Westwood Corporation estimates bad debts at 7% of accounts receivable (gross) on December 31, 2020. December 31, 2020 DRAnswer $Answer CRAnswer $Answer Drone Sales On January 1, 2021, Westwood sold 2 drones costing $250 000 to Norman Ltd. The terms of the sale were 2/10 n/30. On January 5, 2021, William Ltd. bought 10 drones from Westwood costing $2 200 000 with terms 3/15 n/60. Westwood received payments for the amounts due from Norman Ltd. and Williams Ltd. on January 12, 2021. C. Prepare the journal entries for Westwood Corporation for the January 1, January 5 and January 12 transactions respectively. Jan 1 DRAnswer $Answer CRAnswer $Answer Goods sold on credit to Norman Ltd Jan 5 DRAnswer $Answer CRAnswer $Answer Goods sold on credit to William Ltd. Jan 12 DRAnswer $Answer CRAnswer $Answer CR Accounts Receivable $Answer Balance due received from Norman Ltd. DRAnswer $Answer CRAnswer $Answer Balance due received from William’s Ltd. D. Assume instead that Westwood Corporation applies the gross method to record drone sales and resulting receivables, prepare all necessary journal entries pertaining to the sale of the drones to William Ltd. Jan 5 DRAnswer $Answer CRAnswer $Answer Goods sold on credit to William Ltd. Jan 12 DR Cash $Answer DRAnswer $Answer CRAnswer $Answer Balance due received from William’s Ltd.
Useful list of titles/words/phrases. COPY and PASTE from the listing below, the appropriate title/word/phrase as necessary to complete your answers where necessary. Note that a title/word/phrase may be used more than once or not at all, this is NOT a matching exercise.
|
Cash |
Sales Revenue |
Present Value |
|
Cash Received |
Service Revenue |
Discounted Amount |
|
|
Accounts Payable |
Carrying Amount |
|
Interest Receivable |
Sales Discount Forfeited |
Discount |
|
Notes Receivable |
Sales Discount |
Premium |
|
Allowance for Doubtful Accounts |
Bad Debt Expense |
Par |
|
Sales Returns and Allowances |
Interest Expense |
Gross |
|
Interest Payable |
Discount Amortized |
Net |
|
Interest Revenue |
Premium Amortized |
|
----------------------- ---------------------- ---------------------
QUESTION
Westwood Corporation manufactures and sells drones; and provides high-end cinematography services to several major clients. All sales are made on credit. The company records its sales of drones and resulting receivables using the net method. The company’s financial year ends December 31.
Year End Data (December 31, 2020)
|
|
DR |
CR |
|
Accounts Receivable |
$329 740 |
|
|
Allowance for Doubtful Accounts |
|
$3 140 |
|
Sales Revenue |
|
$1 200 000 |
|
Sales Returns and Allowances |
$53 870 |
|
A. Prepare the
December 31, 2020
|
DRAnswer |
$Answer |
|
|
CRAnswer |
|
$Answer |
B. Prepare the journal entry to record bad debt expense assuming Westwood Corporation estimates bad debts at 7% of accounts receivable (gross) on December 31, 2020.
December 31, 2020
|
DRAnswer |
$Answer |
|
|
CRAnswer |
|
$Answer |
Drone Sales
On January 1, 2021, Westwood sold 2 drones costing $250 000 to Norman Ltd. The terms of the sale were 2/10 n/30.
On January 5, 2021, William Ltd. bought 10 drones from Westwood costing $2 200 000 with terms 3/15 n/60.
Westwood received payments for the amounts due from Norman Ltd. and Williams Ltd. on January 12, 2021.
C. Prepare the journal entries for Westwood Corporation for the January 1, January 5 and January 12 transactions respectively.
Jan 1
|
DRAnswer |
$Answer |
|
|
CRAnswer |
|
$Answer |
Goods sold on credit to Norman Ltd
Jan 5
|
DRAnswer |
$Answer |
|
|
CRAnswer |
|
$Answer |
Goods sold on credit to William Ltd.
Jan 12
|
DRAnswer |
$Answer |
|
|
CRAnswer |
|
$Answer |
|
CR Accounts Receivable |
|
$Answer |
Balance due received from Norman Ltd.
|
DRAnswer |
$Answer |
|
|
CRAnswer |
|
$Answer |
Balance due received from William’s Ltd.
D. Assume instead that Westwood Corporation applies the gross method to record drone sales and resulting receivables, prepare all necessary journal entries pertaining to the sale of the drones to William Ltd.
Jan 5
|
DRAnswer |
$Answer |
|
|
CRAnswer |
|
$Answer |
Goods sold on credit to William Ltd.
Jan 12
|
DR Cash |
$Answer |
|
|
DRAnswer |
$Answer |
|
|
CRAnswer |
|
$Answer |
Balance due received from William’s Ltd.
High-end Cinematography Services
On January 1, 2021, Westwood Corporation provided high-end cinematography services to Mattel Inc. and accepted in exchange a 3-yr 5% $4 000 000 promissory note with interest receivable each January 1. Similar notes carry an imputed rate of interest of 10%.
E. Determine the present value of the note received by Westwood Corporation.
P/Y = Answer
C/Y = Answer
N = Answer
I/Y = Answer
PMT = $Answer
FV = $Answer
PV = $Answer
F. This note was issued by Mattel Inc. at Answer(Par / Premium / Discount) of $Answer.
G. Complete the amortization schedule below for Westwood Corporation.
|
|
Cash Received ($) |
Interest Revenue ($) |
Amount Amortized ($) |
Carrying Amount ($) |
|
1 January 2021 |
|
|
|
Answer |
|
1 January 2022 |
Answer |
Answer |
Answer |
Answer |
|
1 January 2023 |
Answer |
Answer |
Answer |
Answer |
|
1 January 2024 |
Answer |
Answer |
Answer |
Answer |
|
1 January 2024 |
Answer |
|
|
Answer |
H. Prepare all necessary journal entries for the dates of January 1, 2021; January 1, 2022; and December 31, 2022 respectively.
Jan 1, 2021
|
DRAnswer |
$Answer |
|
|
CRAnswer |
|
$Answer |
Jan 1, 2022
|
DRAnswer |
$Answer |
|
|
CRAnswer |
|
$Answer |
December 31, 2022
|
DRAnswer |
$200000 |
|
|
DRAnswer |
$Answer |
|
|
CRAnswer |
|
$Answer |
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
