Evergreen Company sells lawn and garden products to wholesalers. The company's fiscal year-end is December 31. During 2024, the following transactions related to receivables occurred:

February 28	Sold merchandise to Lennox, Incorporated, for $18,000 and accepted a 8%, 7-month note. 8% is an appropriate rate for this type of note.
March 31	Sold merchandise to Maddox Company that had a fair value of $11,960, and accepted a noninterest-bearing note for which $13,000 payment is due on March 31, 2025.
April 3	Sold merchandise to Carr Company for $11,000 with terms 310/310 , n30/n30 . Evergreen uses the gross method to account for cash discounts.
April 11	Collected the entire amount due from Carr Company
April 17	A customer returned merchandise costing $4,900. Evergreen reduced the customers receivable balance by $6,700, the sales price of the merchandise. Sales returns are recorded by the company as they occur.
April 30	Transferred receivables of $67,000 to a factor without recourse. The factor charged Evergreen a 2% finance charge on the receivables transferred. The sale criteria are met.
June 30	Discounted the Lennox, Incorporated, note at the bank. The banks discount rate is 10%. The note was discounted without recourse.
September 30	Lennox, Incorporated, paid the note amount plus interest to the bank.

Required 1:

a. Sold merchandise to Lennox, Incorporated, for $18,000 and accepted a 8%, 7-month note. 8% is an appropriate rate for this type of note. Record the transaction.

b. Sold merchandise to Maddox Company that had a fair value of $11,960, and accepted a noninterest-bearing note for which $13,000 payment is due on March 31, 2025. Record the transaction.

c. Sold merchandise to Carr Company for $11,000 with terms 3/10, n/30. Evergreen uses the gross method to account for cash discounts. Record the transaction.

d. Collected the entire amount due from Carr Company. Record the transaction.

e. A customer returned merchandise costing $4,900. Evergreen reduced the customers receivable balance by $6,700, the sales price of the merchandise. Sales returns are recorded by the company as they occur. Record the transaction.

f. A customer returned merchandise costing $4,900. Record the transaction.

g. Transferred receivables of $67,000 to a factor without recourse. The factor charged Evergreen a 2% finance charge on the receivables transferred. The sale criteria are met. Record the transaction.

h. Record the accrual of four months of interest on the note receivable issued on February 28. Record the transaction.

i. Discounted the Lennox, Incorporated, note at the bank. The banks discount rate is 10%. The note was discounted without recourse. Record the transaction.

j. Lennox, Incorporated, paid the note amount plus interest to the bank. Record the transaction.

Required 2:

a. Record accrued interest at December 31, 2024.

Required 3:

a. Prepare a schedule showing the effect of the journal entries on 2024 income before taxes. Note: Decreases should be indicated with a minus sign.

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