Reference no: EM13755546
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 $30,000 and accepted a 6%, 7-month note. 6% is an appropriate rate for this type of note.
Mar. 31 Sold merchandise to Maddox Co. and accepted a noninterest-bearing not with a discount rate of 6%. The $25,000 payment is due on March 31, 2017.
Apr. 3 Sold merchandise to Carr Co. for $22,000 with terms 3/10, n/30. Evergreen uses the gross method to account for cash discounts.
Apr. 11 Collected the entire amount due from Carr Co.
Apr. 17 A Customer returned merchandise costing $4,200. Evergreen reduced the customer's receivable balance by $6,000, the sales price of the merchandise. Sales returns are recorded by the company as they occur.
Apr. 30 Transferred receivables of $60,000 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, inc., note at the bank. The bank's discount rate is 8%. 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 the dates. For transactions involving the sale of merchandise, ignore the entry for the cost of goods sold.
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