Required information [The following information applies to the questions display

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Required information

[The following information applies to the questions displayed below.]

Tyrell Co. entered into the following transactions involving short-term liabilities in 2016 and 2017.

2016

2017

2. Determine the interest due at maturity for each of the three notes. (Do not round your intermediate calculations. Use 360 days a year.)

PrincipalxRatexTime=InterestLocustx%x=NBR Bankx%x=Fargo Bankx%x=

Apr. 20 Purchased $40,250 of merchandise on credit from Locust, terms n/30. Tyrell uses the perpetual inventory system. May 19 Replaced the April 20 account payable to Locust with a 90-day, $35,000 note bearing 10% annual interest along with paying $5,250 in cash. July 8 Borrowed $80,000 cash from NBR Bank by signing a 120-day, 9% interest-bearing note with a face value of $80,000. ___?___ Paid the amount due on the note to Locust at the maturity date. ___?___ Paid the amount due on the note to NBR Bank at the maturity date. Nov. 28 Borrowed $42,000 cash from Fargo Bank by signing a 60-day, 8% interest-bearing note with a face value of $42,000. Dec. 31 Recorded an adjusting entry for accrued interest on the note to Fargo Bank.

Explanation / Answer

1) JOURNAL ENTRIES IN THE BOOKS OF TYRELL CO.

2) DETERMINE THE INTEREST DUE AT MATURITY FOR ECH OF THREE NOTES :

   Interest due = actual amount * interest rate * number of days

interest due on 90 days note = (35000 * 10/100) * 90/360

                                           = $ 875

interest due on 120 days note = (80000 * 9/100) * 120 /360

                                              = $ 2400

interest due on 60 days note = (42000 * 8 /100) * 60 /360

                                           = $ 560

DATE PARTICULARS L/F DEBIT CREDIT 20 apr 2016 merchendise a/c dr 40250 to account payable a/c 40250 (being marchendise purchesed) 19 may 2016 account payable a/c dr 40250 to 10 % note a/c 35000 to cash a/c 5250 (being replacement of account payable) 8 july 2016 cash a/c dr 80000 to 9% note a/c 80000 (being borrowed money from bank) 16 aug 2016 10% note a/c dr 35000 interest a/c dr (35000*90/360)*10/100 875 to cash a/c 35875 (being amount paid on 10% note with interest) 5 nov 2016 9% note a/c dr 80000 interst a/c dr(80000*120/360)*9/100 2400 to cash a/c 82400 (being amount paid on 9% note with interest) 28 nov 2016 cash a/c dr 42000 to 8 % note a/c 42000 (being borrowed cash form bank ) 31 dec 2016 intersest on 8% note a/c dr 317.33 to accured interest (42000*8/100)*34/360 317.33 (being accured interest caliculated on 34 days or year ended) 26 jan 2017 8% note a/c dr 42000 interest a/c dr(42000*26/360)*8/100 242.67 accured interest a/c dr 317.33 to cash a/c 42560 (being amount paid on 8% note with interest)

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