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ACC305WEEK3ASSGNP7 - P7-10(Page 388-Evergreen Company...

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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: Feb. 28 Sold merchandise to Lenox, Inc. for $10,000 and accepted a 10%, 7 month note. 10% is an appropriate rate for this type of note. Feb. 28 Notes receivable 10,000 Sales revenue 10,000 Mar. 31 Sold merchandise to Maddox Co. and accepted a non-interest-bearing note with a discount rate of 10%. The $8,000payment is due on March 31,2007. Mar. 31 Notes receivables (face value) 8,000 Discount on note receivable ($8,000 x 10%) 800 Sales revenue (revenue) 7,200 Mar. 31 Discount on note receivable 800 Interest revenue 800 Cash 8,000 Notes receivable (face value) 8,000 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. Gross method Apr. 3 Accounts receivable 7,000 Sales revenue 7,000 Apr. 11 Collected the entire amount due from Carr Co.
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Apr. 11 Cash 6,860 Sales discount 140 Accounts receivable 7,000 Apr. 17 A customer returned merchandise costing $3,200.Evergreen reduced the customer's
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