ACC 305 Week 3 P7-10, P7-14

Feb 3rd, 2012
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ACC 305 Week 3 P7-10, P7-14

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P7-10 (Page 388) - Evergreen Company Evergreen Company sells lawn and garden products to wholesalers. The company's fiscal year-end is December 31. During 2011, the following transactions related to receivables occurred: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 (round all calculations to the nearest dollar).2.Prepare any necessary adjusting entries at December 31, 2011. Adjusting entries are only recorded at year- end (round all calculations to the nearest dollar).3.Prepare a schedule showing the effect of the journal entries in requirements 1 and 2 on 2011 income before taxes.See Below for answers:Problem 7-10Requirement 1February 28, 2011Note receivable10,000Sales revenue10,000March 31, 2011Note receivable (face amount)8,000Discount ($8,000 x 10%)800Sales revenue (difference)7,200April 3, 2011Accounts receivable7,000Sales revenue7,000April 11, 2011Cash (98% x $7,000)$6,860Sales discounts (2% x $7,000)140Accounts receivable7,000April 17, 2011Sales returns5,000Accounts receivable5,000Inventory3,200Cost of goods sold3,200April 30, 2011Cash (99% x $50,000)49,500Loss on sale of receivables (1% x $50,000)500Accounts receivable50,000To accrue interest on note receivable for four months.June 30, 2011Interest receivable333Interest revenue

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