5/4/2021
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Score: 20/20 Points 100 %
5/4/2021
Assignment Print View
10. Award: 3 out of 3.00 points
Evergreen Company sells lawn and garden products to wholesalers. The company's fiscal year-end is December 31. During 2021, the
following transactions related to receivables occurred:
Feb. 28 Sold merchandise to Lennox, Inc., for $20,000 and accepted a 6%, 7-month note. 6% is an appropriate rate for this type of note.
Mar. 31 Sold merchandise to Maddox Co. that had a fair value of $15,040, and accepted a noninterest-bearing note for which $16,000 payment is
due on March 31, 2022.
Apr. 3 Sold merchandise to Carr Co. for $14,000 with terms 2/10, n/30. Evergreen uses the gross method to account for cash discounts.
11 Collected the entire amount due from Carr Co.
17 A customer returned merchandise costing $4,800. Evergreen reduced the customer’s receivable balance by $6,600, the sales price of the
merchandise. Sales returns are recorded by the company as they occur.
30 Transferred receivables of $66,000 to a factor without recourse. The factor charged Evergreen a 1% finance charge on the receivables
transferred. The sale criteria are met.
June 30 Discounted the Lennox, Inc., note at the bank. The bank’s discount rate is 8%. The note was discounted without recourse.
Sep. 30 Lennox, Inc., paid the note amount plus interest to the bank.
Required:
1. Prepare the necessary journal entries for Evergreen for each of the above dates. For transactions involving the sale of merchandise,
ignore the entry for the cost of goods sold.
2. Prepare any necessary adjusting entries at December 31, 2021. Adjusting entries are only recorded at year-end.
3. Prepare a schedule showing the effect of the journal entries on 2021 income before taxes.
5/4/2021
Assignment Print View
Required 1 Required 2
Complete this question by entering your answers in the tabs below.
Prepare the necessary journal entries for Evergreen for each of the above dates. For transactions involving the sale of
merchandise, ignore the entry for the cost of goods sold. (If no entry is required for a transaction/event, select "No journal
entry required" in the first account field. Do not round intermediate calculations. Round your final answers to the nearest
whole dollar.)
Required 1
Required 2
Required 3
No
Date
General Journal
Debit
Credit
1
February 28, 2021
Notes receivable
20,000
Sales revenue
20,000
2
March 31, 2021
Notes receivable
16,000
Discount on notes receivable
960
Sales revenue
15,040
3
April 03, 2021
Accounts receivable
14,000
Sales revenue
14,000
4
April 11, 2021
Cash
13,720
Sales discounts
280
Accounts receivable
14,000
5
April 17, 2021
Sales returns
6,600
Accounts receivable
6,600
6
April 17, 2021
Inventory
4,800
Cost of goods sold
4,800
7
April 30, 2021
Cash
65,340
Loss on sale of accounts receivable
660
Accounts receivable
66,000
8
June 30, 2021
Interest receivable
400
Interest revenue
400
9
June 30, 2021
Cash
20,286
Loss on sale of notes receivable
114
Interest receivable
400
Notes receivable
20,000
10
September 30, 202
No journal entry required
rev: 09_13_2019_QC_CS-180022, 09_18_2020_QC_CS-228954
5/4/2021
Assignment Print View
Evergreen Company sells lawn and garden products to wholesalers. The company's fiscal year-end is December 31. During 2021, the
following transactions related to receivables occurred:
Feb. 28 Sold merchandise to Lennox, Inc., for $20,000 and accepted a 6%, 7-month note. 6% is an appropriate rate for this type of note.
Mar. 31 Sold merchandise to Maddox Co. that had a fair value of $15,040, and accepted a noninterest-bearing note for which $16,000 payment is
due on March 31, 2022.
Apr. 3 Sold merchandise to Carr Co. for $14,000 with terms 2/10, n/30. Evergreen uses the gross method to account for cash discounts.
11 Collected the entire amount due from Carr Co.
17 A customer returned merchandise costing $4,800. Evergreen reduced the customer’s receivable balance by $6,600, the sales price of
the merchandise. Sales returns are recorded by the company as they occur.
30 Transferred receivables of $66,000 to a factor without recourse. The factor charged Evergreen a 1% finance charge on the receivables
transferred. The sale criteria are met.
June 30 Discounted the Lennox, Inc., note at the bank. The bank’s discount rate is 8%. The note was discounted without recourse.
Sep. 30 Lennox, Inc., paid the note amount plus interest to the bank.
Required:
1. Prepare the necessary journal entries for Evergreen for each of the above dates. For transactions involving the sale of merchandise,
ignore the entry for the cost of goods sold.
2. Prepare any necessary adjusting entries at December 31, 2021. Adjusting entries are only recorded at year-end.
3. Prepare a schedule showing the effect of the journal entries on 2021 income before taxes.
5/4/2021
Assignment Print View
Required 1 Required 2
Complete this question by entering your answers in the tabs below.
Prepare the necessary journal entries for Evergreen for each of the above dates. For transactions involving the sale of
merchandise, ignore the entry for the cost of goods sold. (If no entry is required for a transaction/event, select "No journal
entry required" in the first account field. Do not round intermediate calculations. Round your final answers to the nearest
whole dollar.)
Required 1
Required 2
Required 3
No
Date
General Journal
Debit
Credit
1
February 28,
2021
Notes receivable
20,000
Sales revenue
20,000
2
March 31, 2021
Notes receivable
16,000
Discount on notes receivable
960
Sales revenue
15,040
3
April 03, 2021
Accounts receivable
14,000
Sales revenue
14,000
4
April 11, 2021
Cash
13,720
Sales discounts
280
Accounts receivable
14,000
5
April 17, 2021
Sales returns
6,600
Accounts receivable
6,600
6
April 17, 2021
Inventory
4,800
Cost of goods sold
4,800
7
April 30, 2021
Cash
65,340
Loss on sale of accounts receivable
660
Accounts receivable
66,000
8
June 30, 2021
Interest receivable
400
Interest revenue
400
9
June 30, 2021
Cash
20,286
Loss on sale of notes receivable
114
Interest receivable
400
Notes receivable
20,000
10
September 30,
2021
No journal entry required
rev: 09_13_2019_QC_CS-180022, 09_18_2020_QC_CS-228954
5/4/2021
Assignment Print View
1.
March 31, 2021:
Discount on notes receivable ($16,000 × 6%) = $960
April 11, 2021:
Cash (98% × $14,000) = $13,720
Sales discounts (2% × $14,000) = $280
April 30, 2021:
Cash (99% × $66,000) = $65,340
Loss on sale of receivables (1% × $66,000) = $660
June 30, 2021:
Interest revenue ($20,000 × 6% × 4/12) = $400
$20,000 Face amount
700 Interest to maturity ($20,000 × 6% × 7/12)
20,700 Maturity value
(414) Discount ($20,700 × 8% × 3/12)
$20,286 Cash proceeds
2. Interest revenue ($16,000 × 6% × 9/12) = $720
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