Question

Evergreen Company sells lawn and garden products to wholesalers. The company’s 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 customer’s 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 bank’s 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.)

Answer 1

Question No:1

No	Date	General Jounal	Debit	Credit
9	June 30,2016	Bank A/C	17888
		Discount A/C	2912
		Note Receivable		20000
		Interest Receivable		800

Question No:2

No	Date	General Jounal	Debit	Credit
9	Dec 31,2016	Inventory A/C	5100
		Trading A/C		5100

Question No:3

Date	Increase / Decrease
Feb 28,2016	$20000
March 31,2016	$13,200
April 3, 2016	$12,000
April 11, 2016	- $ 240
April 17, 2016	- $ 6,900
April 17, 2016	$ 5,100
April 30, 2016	$68,310
June 30, 2016	- $ 800
June 30,2016	$20,888
Dec 31,2016	- $5,100
Total Increase	$105,570