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Intermediate Accounting 3




Question;7-10;Review the financial information pertaining to Evergreen Company and prepare;the following;Prepare the necessary journal entries for Evergreen for each of;the dates listed in the problem. For transactions involving the sale of;merchandise, ignore the entry for the cost of goods sold (round all;calculations to the nearest dollar).;Prepare any necessary adjusting entries at December 31, 2011.;Adjusting entries are only recorded at year-end (round all calculations to;the nearest dollar).;Prepare a schedule showing the effect of the journal entries in;requirements 1 and 2 on 2011 income before taxes.;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;February 28;Sold merchandise to Lennox, Inc. for $10,000 and;accepted a 10%, 7-month note. 10% is an approximate rate for this type of;note.;March 31;Sold Merchandise to Maddox Co. and accepted a;noninterest-bearing note with a discount rate of 10%. The $8,000 payment is;due on March 31, 2012.;April 3;Sold merchandise to Carr Co. for $7,000 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 $3,200.;Evergreen reduced the customer?s receivable balance by $5,000, the sales;price of the merchandise. Sales returns are recorded by the company as they;occur.;30;Transferred receivables of $50,000 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 12%. The note was discounted without recourse.;August 31;Lennox, Inc. paid the note plus interest to the;bank.;7-14;Review the information pertaining to El Gato Painting Company and prepare the;following;Prepare a bank reconciliation for the El Gato checking account;at December 31, 2011.;Prepare any necessary adjusting journal entries indicated.;El Gato Painting Company maintains a;checking account at American Bank. Bank statements are prepared at the end of;each month. The November 30, 2011 reconciliation of the bank balance is as;follows;Balance per bank, November 30;$3231;Add: Deposits outstanding;1,200;Less: Checks Outstanding;#363;$123;#365;201;#380;56;#381;86;#382;340;(806);Adjusted balance per bank, November 30;$3,625;The company?s general ledger checking account showed the following;for December;Balance, December 1;$3,625;Receipts;42,650;Disbursements;(41,853);Balance, December 31;$4,422;The December bank statement contained the;following information;Balance, December 1;$3,231;Deposits;43,000;Checks Processed;(41,918);Service Charges;(22);NSF Checks;(440);Balance, December 31;$3,851;The;Checks that were processed by the bank in December include all of the;outstanding checks at the end of November except for check #365. In addition;there are some December checks that had not been processed by the bank by the;end of the month. Also, you discover that check #411 for $320 was correctly;recorded by the bank but was incorrectly recorded on the books as a $230;disbursement for advertising expense. Included in the bank?s deposits is a;$1,300 deposit incorrectly credited to the company?s account. The deposit;should have been posted to the credit of the Los Gatos Company. The NSF checks;have not been re-deposited and the company will seek payment from the customers;involved.


Paper#39731 | Written in 18-Jul-2015

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