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Evergreen Company sells lawn and garden products to wholesalers.

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Question;Week Three Assignment Intermediate I;P7-10;Miscellaneous receivable transactions;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;Feb. 28;Sold merchandise to Lennox, Inc. for 10,000 and accepted a 10%, 7-month;note. 10% 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 10%. The 8,000;payment is due on March 31,2012.;Apr. 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.;Aug. 31;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. The transaction involving the sale of;merchandise, ignore the entry for the cost of goods sold (round all;calculations to the nearest dollars).;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.;P;7-14 Bank Reconciliation and adjusting entries;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;Add: Deposits;outstanding;3,231;Less: Checks;outstanding;1,200;#363;123;#365;201;#380 56;#381;86;#382;340;Adjusted balance;per bank, November 30;(806);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 $320.00 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 deposit;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 no ben redeposited and the company will seek payment from the;customers involved.;Required;1.;Prepare a bank reconciliation for the El;Gato checking account at December 31, 2011.;2.;Prepare any necessary adjusting journal;entries indicated.

 

Paper#44725 | Written in 18-Jul-2015

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