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 12%, 7-month note. 12% is an appropriate rate for this type of note.
Mar.		31		Sold merchandise to Maddox Co. that had a fair value of $13,200, and accepted a noninterest-bearing note for which $15,000 payment is due on March 31, 2022.
Apr.		3		Sold merchandise to Carr Co. for $12,000 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 $5,100. Evergreen reduced the customers receivable balance by $6,900, the sales price of the merchandise. Sales returns are recorded by the company as they occur.
		30		Transferred receivables of $69,000 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 banks discount rate is 14%. 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.

Journal entry worksheet

• Sold merchandise to Lennox, Inc. for $20,000 and accepted a 12%, 7-month note. 12% is an appropriate rate for this type of note.

Note: Enter debits before credits.

Date	General Journal	Debit	Credit
February 28, 2021

• Sold merchandise to Maddox Co. and accepted a noninterest-bearing note with a discount rate of 12%. The $15,000 payment is due on March 31, 2021.

Note: Enter debits before credits.

Date	General Journal	Debit	Credit
March 31, 2021

• Sold merchandise to Carr Co. for $12,000 with terms 2/10, n/30. Evergreen uses the gross method to account for cash discounts.

Note: Enter debits before credits.

Date	General Journal	Debit	Credit
April 03, 2021

Journal entry

4: Collected the entire amount due from Carr Co.

5: Evergreen reduced the customers receivable balance by $6,900, the sales price of the merchandise. Sales returns are recorded by the company as they occur.

6: A customer returned merchandise costing $5,100.

7: Transferred receivables of $69,000 to a factor without recourse. The factor charged Evergreen a 1% finance charge on the receivables transferred. The sale criteria are met.

8: Record the accrual of four months of interest on the note receivable issued on February 28.

9: Discounted the Lennox, Inc., note at the bank. The banks discount rate is 14%. The note was discounted without recourse.

10: Lennox, Inc., paid the note amount plus interest to the bank.

Required 2

Journal entry

Record accrued interest at December 31, 2021.

Required 3

Prepare a schedule showing the effect of the journal entries on 2021 income before taxes. (Decreases should be indicated with a minus sign. Do not round intermediate calculations. Round your final answers to the nearest whole dollar.)

	Income
Date	increase (decrease)
February 28
March 31
April 3
April 11
April 17
April 17
April 30
June 30
June 30
December 31
Total effect