Required information The following information applies to the questions displaye

Question

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 Apr. 20 Purchased $38,500 of merchandise on credit from Locust, terms n/30. Tyrel1 uses the perpetual inventory system May 19 Replaced the April 20 account payable to Locust with a 90-day, $35,000 note bearing 8% annual interest along with paying $3,500 in cash. July 8 Borrowed $51,000 cash from NBR Bank by signing a 120-day, 12% interest-bearing note with a face value of $51,000 ?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 $33,000 cash from Fargo Bank by signing a 60-day, 7% interest-bearing note with a face value of Dec. 31 Recorded an adjusting entry for accrued interest on the note to Fargo Bank 2017 $33,000 Paid the amount due on the note to Fargo Bank at the maturity date. 5.1 Prepare journal entries for all the preceding transactions and events for 2016. (Do not round your intermediate calculations.)

Explanation / Answer

Note:- Total 60 days interest of Fargo Bank = $33000 *60/360 * 0.07

= $385

Date Accounts title Dr Cr 2016 Apr 20 Merchandise inventory 38500 To Accounts payable-locust 38500 may 19 Accounts payable-locust 38500 To Notes payable-locust 35000 To cash 3500 July 8 Cash 51000 To notes payable-NBR bank 51000 Aug 17 Interest expense [35000 * 90/360 days * 8%] 700 Notes payable-locust 35000 To cash 35700 Nov 5 Interest expense [51000 * 120/360*12%] 2040 Notes payable-NBR bank 51000 To cash 53040 Nov 28 Cash 33000 To Notes payable-fargo bank 33000 Dec 31 Interest expense[385 * 33 / 60] 212 To interest payable 212 2017 Jan 27 Interest expense[385 * 27 / 60] 173 interest payable 212 Notes payable-fargo bank 33000 To cash 33385

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