Tyrell Co. entered into the following transactions involving short-term liabilit
ID: 2553951 • Letter: T
Question
Tyrell Co. entered into the following transactions involving short-term liabilities in 2015 and 2016.
2015
Apr. 20 Purchased $39,500 of merchandise on credit from Loco, terms n/30. Tyrell uses the perpetual inventory system.
May 19 Replaced the April 20 account payable to Loco with a 90-day, $35,000 note bearing 7% annual interest along with paying $4,500 in cash.
July 8 Borrowed $51,000 cash from NBR Bank by signing a 120-day, 11% interest-bearing note with a face value of $51,000.
__?__ Paid the amount due on the note to Loco 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 $33,000.
Dec. 31 Recorded an adjusting entry for accrued interest on the note to Fargo Bank.
2016
__?__ Paid the amount due on the note to Fargo Bank at the maturity date.
Required:
1. Determine the maturity date for each of the three notes described.
2. Determine the interest due at maturity for each of the three notes. (Do not round your intermediate calculations. Use 360 days a year.)
3. Determine the interest expense to be recorded in the adjusting entry at the end of 2015. (Do not round your intermediate calculations. Round your final answer to nearest whole dollar. Use 360 days a year.)
4. Determine the interest expense to be recorded in 2016. (Do not round intermediate calculations and round your final answers to nearest whole dollar. Use 360 days a year.)
5.1 Prepare journal entries for all the preceding transactions and events for 2015. (Do not round your intermediate calculations.)
5.2 Prepare journal entries for all the preceding transactions and events for 2016. (Do not round your intermediate calculations.)
Explanation / Answer
2)
3)Interest on note 3 (Nov 28 ) will be matured next year (year 2016 ).Therefore interest will be accrued on this note for 33 days (28 nov -31dec )
Interest accrued to be adjusted : 33000*.07*33/360 = 211.75 [Round 212]
4)Interest expense for 2016 (only note 3 as note 1 and 2 already matured in year 2015
Interest expense : 33000*.07 * 27/360 = $ 173.25 (round to 173) [27days of Jan 2015]
Note Maturity Date Note 1 (Issued on mAY 19) May 19 +90 days 17 August 2015 Note 2 (Issued on july 8 ) July 8 + 120 days 5 November 2015 Note 3 (Issued on nov 28) Nov 28 +60 days 27 Jan 2016Related Questions
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