Evergreen Company sells lawn and garden products to wholesalers. The company's fiscal year-end is December...
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Accounting
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 banks 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
36000
Interest Receivable
1200
Please show me how to arrive at the necessary amounts.
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