Tyrell Co. entered into the following transactions involving short-term liabilit
ID: 342077 • Letter: T
Question
Tyrell Co. entered into the following transactions involving short-term liabilities in 2015 and 2016 2015 Apr. 20 Purchased $38,000 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 8% annual interest along with paying $3,000 in cash July 8 Borrowed $66,000 cash from NBR Bank by signing a 120-day, 11% interest-bearing note with a face value of $66,000 ?-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 $30,000 cash from Fargo Bank by signing a 60-day, 8% interest-bearing note with a face value of $30,000. 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.Explanation / Answer
4 Interest Expenses to be Recorded in 2016.= Principal *Rate *Time
= $ 30,000 * (8/100)* [(60 Days - 34 days interest accured in Year 2015)/365 Days]
= $ 30,000 * 0.08 * [26Days / 365 Days]
= $ 170.96
Days Accured in 2015 = 31 days of december + 3 Days of November including note take date
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