Company sells lawn and garden products to wholesalers. The company\'s fiscal yea

Question

Company sells lawn and garden products to wholesalers. The company's fiscal year-end is December 31. During 2018,the Evergreen following transactions related to receivables occurred: 0s, 7-sonth note. 101 is an appropriate rate for e to Maddox Co. and accepted a noninterest-bearing note with a discount rate of 101. The $8,000 Apr. 3 Sold merchandise to Carr Co. for $7,000 with terms 2/10, n/30. Evergreen uses the gross method to account for 17 A customer returned merchandise costing $3,200. Evergreen reduced the customer's receivable balance by $5,000, Fab. 28 sold merchandise to Lennox, Ine., for $10,000 and accepted a 1 this type of note payment is due on March 31, 2019 cash discounts 11 collected the entire amount due from Carr Co. the sales price of the merchandise. Sales returns are recorded by the company as they occur. 30 Transferred receivables of s50,000 to a factor without recourse. The factor charged Evergreen a charge on June 30 Discounted the Lennox, ?ne., note at the bank. The bank's discount rate is 12, The note was discounted wit sep. 30 Lennox, Inc., paid the note amount plus interest to the bank. Required: ignore the entry for the cost of goods sold. 1. Prepare the necessary journal edtries for Evergreen for each of the above dates. For transactions involving the sale of merchandise, 2. Prepare any necessary adjusting entries at December 31, 2018. Adjusting entries are only recorded at year-end 3. Prepare a schedule showing the effect of the journal entries on 2018 income before taxes. plete this question by entering your answers in the tabs below. Required 1 dates. For transactions involving the sale of Prepare the necessary journal entries for Evergreen for e merchandise, ignore the entry for the cost of goods sold. (If no entry is required for a transaction/event, select "No journa entry required in the first account field. Do not round intermediate calculations. Round your final answers to the nearest whole dollar.) Show lessA

Explanation / Answer

Req 1) journal entries: Date Accounts Titles Debit $ Credit $ Calculation 30-Jun Cash 9313.33 10583.33*0.88 Discount on sale 1270 Note receivable-Lennox 10000 Interest on Note receivable 583.33 (being note discounted bank @ 12%) 30-Sep No entry as already discounted, further entry by bank only. Req 2) Adjusting entry: 31-Dec Interest on note Maddox 545.46 (8000/1.1 - 8000)*9/12 Interest revenue 545.46 (being 9 months interest made due) Req 3) Effect on income before taxes: 28-Feb increase 31-Mar increase 3-Apr increase 11-Apr decrease 17-Apr decrease 17-Apr decrease 30-Apr decrease 30-Jun increase 30-Jun decrease 30-Sep No effect 31-Dec increase

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