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 Receivable	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

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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 companys 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 Williams 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 Williams 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

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