Using the information above, I am trying to solve the blank spaces below (but I
ID: 2477077 • Letter: U
Question
Using the information above, I am trying to solve the blank spaces below (but I am not even sure what to be entering):
Now that the information above is available, how do we calculate the 2015 payment (shown in the next image)?
1.10,.00 points value: 10.00 points The January 1, 2014 trial balance for the Tyrell Company is found on the trial balance tab. The beginning balances are assumed Tyrell Co. entered into the following transactions involving short-term liabilities in 2014 and 2015. 2014 Apr. 20 Purchased $40,250 of merchandise on credit from Locust, terms are 1/10, 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. uly 8 Borrowed $80,000 cash from National Bank by signing a 120-day, 9% interest-bearing note with a face value of $80 000. Aug. 17 Paid the amount due on the note to Locust at the maturity date. Nov. 5 Paid the amount due on the note to National 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 $42,000. Dec. 31 Recorded an adjusting entry for accrued interest on the note to Fargo Bank 2015 Jan. 27 Paid the amount due on the note to Fargo Bank at the maturity date. (Use 360 days a year.) use 360 days a year) Requirement General Journal GeneralT Ledger Trial Balance Schedule of Calculation Payables 2015 payment of Interest 22% of available points. Enter the principal amount, interest rate, and number of days of interest to be recorded for each note. Verify that interest expense agrees your journal entries and the trial balanceExplanation / Answer
1)
Let us first determine the due date calculation of notes payable of fargo bank because the starting date is 2014 and maturity is 2015 , we have to calculate the number of days in 2014 for interest calculation in 2014 and number of days in 2015 for interest calculation in 2015
Due date calculations of notes payable
Fargo bank
(60-day note) Nov-2014 (30 – 28) = 2 days left in Nov
December-2014 = 31 days
33 days so far in 2014
Jan -2015(60 – 33) =27th day of Jan-2015 (due date)
60 Total
calculation of interest payments on due dates
The interest is calculated by using following formula’
Interest =( principal amount * interest rate /360) * note payable days
Tyrell Co
Calculation of interest expense
August 17 - locust note
($)
Principal
35000
Interest Rate
10%
Number of days interest to be recorded in 2014
90
Interest amount
875
Nov 5- National Bank
Principal
80000
Interest Rate
9%
Number of days interest to be recorded in 2014
120
Interest amount
2400
Dec-31- National Bank
Principal
42000
Interest Rate
8%
Number of days interest to be recorded in 2014
33
Interest amount
308
Total interest expense - 2014
3583
To prepare the Journal Entry
General Voucher
Date
Account title and Explanation
Post.
Ref.
Debit ($)
Credit ($)
Jan 27 ,2015
Notes Payable
42,000
Interest
252
Interest payable
308
Cash
42,560
( To payment of notes payable of fargo bank on maturity principal $42,000 debited to notes payable account , interest of upto December 2014 of $308 debited to interest payable account and interest for the days in 2015 debited to interest account and payment is credited cash account)
Explanation: The payment of notes payable of fargo bank on maturity principal $42,000 debited to notes payable account , interest of upto December 2014 of $308 debited to interest payable account and interest for the days in 2015 debited to interest account and payment is credited cash account
Tyrell Co
Calculation of interest expense
August 17 - locust note
($)
Principal
35000
Interest Rate
10%
Number of days interest to be recorded in 2014
90
Interest amount
875
Nov 5- National Bank
Principal
80000
Interest Rate
9%
Number of days interest to be recorded in 2014
120
Interest amount
2400
Dec-31- National Bank
Principal
42000
Interest Rate
8%
Number of days interest to be recorded in 2014
33
Interest amount
308
Total interest expense - 2014
3583
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