Evergreen Company sells lawn and garden products to wholesalers. The companys fiscal year-end is December 31. During 2016, 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. and accepted a noninterest-bearing note with a discount rate of 12%. The $15,000 payment is due on March 31, 2017.
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. (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.)

• 1

  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.

• 2

  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, 2017.

• 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.

• 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

  Accrued 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.

Record accrued interest at December 31, 2016.

Answer is complete but not entirely correct. No General Journal Credit Date February 28, 2016 Note receivable Sales revenue Debit 20,000 20,000 March 31, 2016 15,000 Note receivable Discount on note receivable Sales revenue 0 0 1,800 13,200 3 April 03, 2016 12,000 Accounts receivable Sales revenue 0 0 12,000 April 11, 2016 Cash Sales discounts Accounts receivable 0 0 0 11,760 240 12,000 5 April 17, 2016 6,900 Sales returns Accounts receivable 0 0 6,900 6 April 17, 2016 5,100 Inventory Cost of goods sold 5,100 7 April 30, 2016 Cash Loss on sale of accounts receivable Accounts receivable 68,310 690 69,000 8 June 30, 2016 800 Interest receivable Interest revenue 800 9 June 30, 2016 20,758 42 X Cash Loss on sale of note receivable Interest receivable Note receivable 800 20,000 10 September 30, 20No journal entry required 2. Prepare any necessary adjusting entries at December 31, 2016. Adjusting entries are only recorded at year-end. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) X Answer is complete but not entirely correct. No General Journal Credit Date December 31, 201 Interest receivable Interest revenue Debit 5,100 X 5,100 X 3. Prepare a schedule showing the effect of the journal entries on 2016 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.) * Answer is complete but not entirely correct. Date $ February 28 March 31 April 3 April 11 April 17 April 17 April 30 June 30 June 30 December 31 Total effect Income increase (decrease) 20,000 13,200 12,000 (240) (6,900) 5,100 68,310 X -800 20,888 X -5,100 % 126,458 $