Evergreen Company sells lawn and garden products to wholesalers. The company's fiscal year-end is December 31. During 2021, the following transactions related to receivables occurred: Feb. 28 Sold merchandise to Lennox, Inc., for $36,000 and accepted a 10%, 7-month note. 10% is an appropriate rate for this type of note. June 30 Discounted the Lennox, Inc., note at the bank. The bank's discount rate is 12%. The note was discounted without recourse. Sep. 30 Lennox, Inc., paid the note amount plus interest to the bank. I've got the journal entry for the Feb. 28 transaction and the interest accrual on June 30 correct as seen below, but I cannot figure out the numbers needed as the debits for "Cash" and "Loss on Notes Receivable" on the transaction when the note is discounted to the bank. Date General Journal Debit Credit 28-Feb-21 Notes Receivable 36000 Sales Revenue 36000 30-Jun-21 Interest Receivable 1200 Interest Revenue 1200 30-Jun-21 Cash Loss on Notes Receivable Notes Receivable Interest Receivable 36000 1200 Please show me how to arrive at the necessary amounts.
Evergreen Company sells lawn and garden products to wholesalers. The company's fiscal year-end is December 31. During 2021, the following transactions related to receivables occurred: Feb. 28 Sold merchandise to Lennox, Inc., for $36,000 and accepted a 10%, 7-month note. 10% is an appropriate rate for this type of note. June 30 Discounted the Lennox, Inc., note at the bank. The bank's discount rate is 12%. The note was discounted without recourse. Sep. 30 Lennox, Inc., paid the note amount plus interest to the bank. I've got the journal entry for the Feb. 28 transaction and the interest accrual on June 30 correct as seen below, but I cannot figure out the numbers needed as the debits for "Cash" and "Loss on Notes Receivable" on the transaction when the note is discounted to the bank. Date General Journal Debit Credit 28-Feb-21 Notes Receivable 36000 Sales Revenue 36000 30-Jun-21 Interest Receivable 1200 Interest Revenue 1200 30-Jun-21 Cash Loss on Notes Receivable Notes Receivable Interest Receivable 36000 1200 Please show me how to arrive at the necessary amounts.
Chapter9: Accounting For Receivables
Section: Chapter Questions
Problem 22MC: A company collects an honored note with a maturity date of 24 months from establishment, a 10%...
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Question
![Evergreen Company sells lawn and garden products to wholesalers. The company's fiscal year-end is December 31.
During 2021, the following transactions related to receivables occurred:
Feb.
28
Sold merchandise to Lennox, Inc., for $36,000 and accepted a 10%, 7-month note. 10% is an
appropriate rate for this type of note.
June
30
Discounted the Lennox, Inc., note at the bank. The bank's discount rate is 12%. The note was
discounted without recourse.
Sep.
30
Lennox, Inc., paid the note amount plus interest to the bank.
I've got the journal entry for the Feb. 28 transaction and the interest accrual on June 30 correct as seen below, but I
cannot figure out the numbers needed as the debits for "Cash" and "Loss on Notes Receivable" on the transaction when
the note is discounted to the bank.
Date
General Journal
Debit
Credit
28-Feb-21 Notes Receivable
36000
Sales Revenue
36000
30-Jun-21 Interest Receivable
1200
Interest Revenue
1200
30-Jun-21 Cash
Loss on Notes Receivable
Notes Receivable
Interest Receivable
36000
1200
Please show me how to arrive at the necessary amounts.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F82707734-4ef7-40a8-a876-e1aa44320fc5%2F5540ac3c-3d61-4c33-a0f0-1805eb5e2361%2Fc2z937h_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Evergreen Company sells lawn and garden products to wholesalers. The company's fiscal year-end is December 31.
During 2021, the following transactions related to receivables occurred:
Feb.
28
Sold merchandise to Lennox, Inc., for $36,000 and accepted a 10%, 7-month note. 10% is an
appropriate rate for this type of note.
June
30
Discounted the Lennox, Inc., note at the bank. The bank's discount rate is 12%. The note was
discounted without recourse.
Sep.
30
Lennox, Inc., paid the note amount plus interest to the bank.
I've got the journal entry for the Feb. 28 transaction and the interest accrual on June 30 correct as seen below, but I
cannot figure out the numbers needed as the debits for "Cash" and "Loss on Notes Receivable" on the transaction when
the note is discounted to the bank.
Date
General Journal
Debit
Credit
28-Feb-21 Notes Receivable
36000
Sales Revenue
36000
30-Jun-21 Interest Receivable
1200
Interest Revenue
1200
30-Jun-21 Cash
Loss on Notes Receivable
Notes Receivable
Interest Receivable
36000
1200
Please show me how to arrive at the necessary amounts.
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