Purchased $40,250 of merchandise on credit from Locust, terms are 1/10, n/30. Ty

ID: 2490335 • Letter: P

Question

Purchased $40,250 of merchandise on credit from Locust, terms are 1/10, n/30. Tyrell uses the perpetual inventory system.

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.

Borrowed $80,000 cash from National Bank by signing a 120-day, 9% interest-bearing note with a face value of $80,000.

Borrowed $42,000 cash from Fargo Bank by signing a 60-day, 8% interest-bearing note with a face value of $42,000.

[The following information applies to the questions displayed below.] Required 1. Determine the maturity date for each of the three notes described. Locust Natl. Bank Fargo Maturity date

Explanation / Answer

1)Maturity date:
Locust= Apr20+90 days=19th july
National bank=Juk 8+120=5th nov
Fargo bank=Nov 28+60 days=27 jan 15

2)
Locust= 35000*10%*(90/360)=875
National bank=8000*9%*(120/360)=2400
Fargo bank=42000*8%*(60/360)=560

3)interest expense accrued in 2014 total from locust and national but only 42000*8%*33/360
=308
total=875+2400+308=3583

4)in 2015 the interest expense

=42000*8%*(60-33)/360
=252

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Purchased $40,250 of merchandise on credit from Locust, terms are 1/10, n/30. Ty

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