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 $10,000 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 $7,520, and accepted a noninterest-bearing note for which $8,000 payment is due on March 31, 2022. Apr 3 Sold merchandise to Carr Co. for $5,500 with terms 3/10, 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 $3,700. Evergreen reduced the customer's receivable balance by $5,500, the sales price of the merchandise. Sales returns are recorded by the company as they occur. 30 Transferred receivables of $55,000 to a factor without recourse. The factor charged Evergreen 2finance 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. Required 1 Required 2 Required 3 Prepare the necessary journal entries for Evergreen for each of the above dates. For transactions involving the ignore the entry for the cost of goods sold. (If no entry is required for a transaction/event, select "No journal account field. Do not round intermediate calculations. Round your final answers to the nearest whole dollar.) View transaction list Journal entry worksheet Sold merchandise to Lennox, Inc. for $10,000 and accepted a 6%, 7-month note. 6% is an appropriate rate for this type of note. Note: Enter debits before credits. Debit Credit Date February 28, 2021 General Journal Notes receivable Sales revenue 10,000 10,000 Journal entry worksheet Sold merchandise to Maddox Co. and accepted a noninterest-bearing note with a discount rate of 6%. The $8,000 payment is due on March 31, 2021. Note: Enter debits before credits. Date Debit Credit March 31, 2021 General Journal Notes receivable Discount on notes receivable 8,000 Sales revenue 480 7,520 Journal entry worksheet Collected the entire amount due from Carr Co. Note: Enter debits before credits. Date General Journal Debit Credit April 11, 2021 5,335 165 5,500 View transaction list Journal entry worksheet 2 3 4 5 5 6 78 9 10 Evergreen reduced the customer's receivable balance by $5,500, the sales price of the merchandise. Sales returns are recorded by the company as they occur. Note: Enter debits before credits. Date Debit Credit April 17, 2021 5,500 General Journal Sales returns Accounts receivable Inventory Cost of goods sold 5,500 3,700 3,700 Journal entry worksheet Transferred receivables of $55,000 to a factor without recourse. The factor charged Evergreen a 2% finance charge on the receivables transferred. The sale criteria are met. Note: Enter debits before credits. Date General Journal Debit Credit April 30, 2021 Journal entry worksheet
