+1-415-670-9189
info@expertsmind.com
Prepare the necessary journal entries
Course:- Taxation
Reference No.:- EM13298421




Assignment Help
Assignment Help >> Taxation

Evergreen Company sell lawn and gardenproducts to wholesalers. The company's fiscal year-end is December31. During 2006, the following transactions related to receivablesoccurred:Feb. 28 Sold merchandise to Lennox, Inc. for $10,000 andaccepted a 10%, 7 month note. 10% is an appropriate rate for thistype of note.Mar. 31 Sold merchandise to Maddox Co. and accepted anoninterest-bearing note with a discount rate of 10%. The $8,000payment is due on March 31,2007.Apr. 3 Sold merchandise to Carr Co. for $7,000 withterms 2/10, n/30. Evergreen uses the gross method to account forcash discounts.Apr. 11 Collected the entire amount due from CarrCo.Apr. 17 A customer returned merchandise costing $3,200.Evergreen reduced the customer's receivable balance by $5,000, thesales price of the merchandise. Sales returns are recorded by thecompany as they occur.Apr. 30 Transferred receivables of $50,000 to a factorwithout recourse. The factor charged Evergreen a 1% finance chargeon 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 withoutrecourse.Aug. 31 Lennox, Inc,. paid the note amount plus interestto the bank.Required:

1. Prepare the necessary journal entries for Evergreen foreach of the above dates. For transactions involving the sale ofmerchandise, ignore the entry for the cost of goods sold (round allcalculations to the nearest dollar).

2. Prepare any necessary adjusting entries at December31,2006. Adjusting entries are only recorded at year-end (round allcalculations to the nearest dollar).

3. Prepare a schedule showing the effect of the journalentries in requirements 1 and 2 on 2006 income before taxes.




Put your comment
 
Minimize


Ask Question & Get Answers from Experts
Browse some more (Taxation) Materials
Examine the rules for claiming deductions for business vehicles. Next, recommend one method of cost-recovery deductions that would result in the largest tax deduction for yo
Deferred income tax liability The difference between the amounts of book and tax depreciation expense. Why has the amount of the deferred income tax liability risen steadily f
Question 1 Jack and Jill jointly own and run a bed and breakfast business. The business is run through their partnership, J & J Bed and Breakfast. Jack and Jill also own an in
One overseas company it had an agreement with, which still had 8 years to run, decided to cancel its agreement with Clara Lees. It paid Clara Less $500,000 to obtain Clara L
Prepare a memorandum using the format -  Issue, Authority, Analysis, Conclusion - This year, Dr. Smith spent $8,750 of his own funds to travel to southern Utah to collect som
Write a memo to Mr. White that gives him the Income Tax Expense, the Income Tax Payable, and the difference between those two values. Also, name that difference and explain
The equipment required for the project has no salvage value. The required return for projects of this type is 13 percent, and the company has a 40 percent tax rate. Should y
Calculate T's taxable income for the tax year of 2012. T will not be able to itemize deductions. Calculate T's capital account in the partnership at the end of the tax year.