Tyrell Co. entered into the following transactions involving short-term liabilit
ID: 2578561 • Letter: T
Question
Tyrell Co. entered into the following transactions involving short-term liabilities in 2016 and 2017, 2016 Apr. 20 Purchased $40.250 of merchandise on credit from Locust, terms n/30. Tyrell uses the perpe May 19 Replaced the April 20 account payable to Locust with a 90-day, $35.000 note bearing 10 July 8 Borrowed $80,000 cash from NBR Bank by signing a 120-day, 9% interest-bearing note with a ual inventory system. annual interest along with paying $5.250 in cash. 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. Borrowed $42,000 cash from Fargo Bank by signing a 60-day, 8% interest-bearing note with a face value of $42,000. Recorded an adjusting entry for accrued interest on the note to Fargo Bank. Nov. 28 Dec. 31 2017 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. (Assume a 360-day year.) 3. Determine the interest expense to be recorded in the adjusting entry at the end of 2016. 4. Determine the interest expense to be recorded in 2017 5. Prepare journal entries for all the preceding transactions and events for years 2016 and 2017Explanation / Answer
1.
2.
3.
Interest for 60 days on the third note : $560.00
Number of days in 2016 (Nov.28 to Dec.31) :35 days
Interest to be recorded in the adjusting entry :$327.00 ($560 x 35 /60)
4.
Interest expense to be recorded in 2017 : $233.00 ($560.00 - $327.00)
5.
Sl.No. Date of issue Term Maturity Date 1 May 19, 2016 90 days August 16, 2016 2 July 8, 2016 120 days November 4, 2016 3 November 28, 2016 60 days January 26, 2017Related Questions
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