ACCT 3113 Chapter 7 Supplemental 6-Transactions with receivables Redbud Com pany sells pet care products to wholesalers. Redbud records adjusting entries annually at December 31 During 2018, the following transactions related to receivables occurred: January 1 August 1 December 1 December 4 December 12 Sold merchandise to Nellie Co. and accepted a 2-year, $120,000 noninterest-bearing note due on December 31, 2019. The discount rate is 6%. Redbud used the offective interestmethod to recognize interest revenue on the note. Sold merchandiseto Red Cat Co for $15,000 and accepted an 8%, 6-month note. Principal and interest are due on January 31, 2019. Sold merchandise to Magic Dog Co. and accepted a 3-month, $12,000 noninterest-bearing note due on February 28, 2019, The discount rate is 9% Sold merchandise to Black Dog Co. for $9,000 with terms 2/10, n/30. Redbud used the gross method to record sales discounts. Collected the amount due from Black Dog Co. Sold $80,000 of accounts receivable to Fat Cat Bank withoutrecourse Fat Cat charged a 1% finance fee and retained 8% to cover possible adjustments. December 31 a. Record each of the transactions above for Redbud Company. Ignore cost of goods sold. b. Record December 31, 2018, adjusting entries for Redbud c. Redbud's preliminary 2018 net income without the effects of the entries in a. and b. is $100,000. What is the correct 2018 net income? Ignore income taxes. ACCT 3113 Chapter 7 Supplemental 6-Transactions with receivables Redbud Com pany sells pet care products to wholesalers. Redbud records adjusting entries annually at December 31 During 2018, the following transactions related to receivables occurred: January 1 August 1 December 1 December 4 December 12 Sold merchandise to Nellie Co. and accepted a 2-year, $120,000 noninterest-bearing note due on December 31, 2019. The discount rate is 6%. Redbud used the offective interestmethod to recognize interest revenue on the note. Sold merchandiseto Red Cat Co for $15,000 and accepted an 8%, 6-month note. Principal and interest are due on January 31, 2019. Sold merchandise to Magic Dog Co. and accepted a 3-month, $12,000 noninterest-bearing note due on February 28, 2019, The discount rate is 9% Sold merchandise to Black Dog Co. for $9,000 with terms 2/10, n/30. Redbud used the gross method to record sales discounts. Collected the amount due from Black Dog Co. Sold $80,000 of accounts receivable to Fat Cat Bank withoutrecourse Fat Cat charged a 1% finance fee and retained 8% to cover possible adjustments. December 31 a. Record each of the transactions above for Redbud Company. Ignore cost of goods sold. b. Record December 31, 2018, adjusting entries for Redbud c. Redbud's preliminary 2018 net income without the effects of the entries in a. and b. is $100,000. What is the correct 2018 net income? Ignore income taxes
