PROBLEM SETA Tyrell Co. entered into the following transactions involving short-
ID: 2582900 • Letter: P
Question
PROBLEM SETA Tyrell Co. entered into the following transactions involving short-term liabilities in 2016 and 2017. 2016 Problem 11-1A Short term notes payable transactions and entries Apr. 20 Purchased $40.250 of merchandise on credit from Locust, terms n/30. Tyrell uses the perpe ual inventory system. Replaced the April 20 account payable to Locust with a 90-day. $35.000 annual interest along with paying $5,250 in cash. Borrowed $80,0XX) cash fromNBR Bank by signing a 120-day, 9% interest-bearing note with 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 $4300 cash from Fargo Bank by face value of $42,000. Recorded an adjusting entry for accrued interest on the note to Fargo Bank. May 19 note bearing 10% P1 July 8 Nov. 28 Dec. 31 2017 signing a 60-day, 8% interest-bearing note with a 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 journa (2) Locust, $875 (3) $308 (4) $252 Check I entries for all the preceding transactions and events for years 2016 and 2017.Explanation / Answer
Tyrell Co. entered into the following transactions involving short-term liabilities .
2017 Apr. 20 Purchased $40,250 of merchandise on credit from Locust, terms are 1/10, n/30. Tyrell uses the perpetual inventory system.
Merchandise Inventory Dr. 40250
Account Payable- Locust Cr 40250
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.
Account Payable- Locust DR. 40250
10% Notes Payable Cr. 35000
Cash Cr. 5250
July 8 Borrowed $80,000 cash from National Bank by signing a 120-day, 9% interest-bearing note with a face value of $80,000.
Cash Dr. 80000
9% Notes Payable Cr. 80000
_Aug 17___ Paid the amount due on the note to Locust at the maturity date.
10% Notes Payable Dr. 35000
Interest Expenses Dr. 875
Cash Cr. 35875
(35000*.1/360 x 90)
_Nov 5___ Paid the amount due on the note to National Bank at the maturity date.
9% Notes Payable Dr. 80000
Interest Expenses Dr. 2400
Cash Cr. 82400
(80000*.09/360 x120)
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.
Cash Dr. 42000
8% Notes Payable Cr. 42000
Dec. 31 Recorded an adjusting entry for accrued interest on the note to Fargo Bank.
Interest expenses Dr 308
Interest payable Cr 308
42000 x .08/360 x 33
2018 Jan 27 Paid the amount due on the note to Fargo Bank at the maturity date.
8% Notes Payable Dr. 42000
Interest payable Dr. 308
Interest Expenses Dr. 252
Cash Cr. 42560
(42000*.08/360*27)
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