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 $12,000 and accepted a 8%, 7-month note. 88 is an appropriate rate for this type of note. Mar. 31 Sold merchandise to Maddox Co. that had a fair value of $7,636, and accepted a noninterest-bearing note for which $8,300 payment is due on March 31, 2022. Apr. 3 Sold merchandise to Carr Co. for $7,300 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 $3,500. Evergreen reduced the customer's receivable balance by $5,300, the sales price of the merchandise. Sales returns are recorded by the company as they occur. 30 Transferred receivables of $53,000 to a factor without recourse. The factor charged Evergreen a 24 finance 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 10%. The 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 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.) View transaction list View journal entry worksheet No General Journal Debit Credit 1 Date February 28, 2021 Notes receivable Sales revenue 12,000 12,000 2 March 31, 2021 8,300 Notes receivable Discount on notes receivable Sales revenue 664 7,636 3 April 03, 2021 7,300 Accounts receivable Sales revenue 7,300 4 April 11, 2021 Cash Sales discounts Accounts receivable 7,081 219 7,300 5 April 17, 2021 5,300 Sales returns Accounts receivable 5,300 6 April 17, 2021 3,500 Inventory Cost of goods sold 3,500 7 April 30, 2021 Cash Loss on sale of accounts receivable Accounts receivable 51,940 1,060 53,000 8 June 30, 2021 Interest receivable 320 Interest revenue 320 9 June 30, 2021 Cash Loss on sale of notes receivable Interest receivable Interest receivable 10 September 30, 2021 No journal entry required Required 1 Required 2 > Required 1 Required 2 Required 3 Prepare any necessary adjusting entries at December 31, 2021. 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.) View transaction list View journal entry worksheet : No Debit Credit 1 Date General Journal December 31, Discount on notes receivable 2021 Interest revenue Required 1 Required 2 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 increase (decrease) Date $ 12,000 February 28 March 31 April 3 April 11 April 17 April 17 April 30 June 30 June 30 December 31 Total effect 12,000
