Question

Problem 9-1A Short-term notes payable transactions and entries LO P1 [The following information applies to the questions displayed below.] Tyrell Co. entered into the following transactions involving short-term liabilities. Year 1 Apr. 20 Purchased $35,500 of merchandise on credit from Locust, terms n/30. May 19 Replaced the April 20 account payable to Locust with a 90-day, 8%, $35,000 note payable along with paying $500 in cash. July 8 Borrowed $63,000 cash from NBR Bank by signing a 120-day, 11%, $63,000 note payable. 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. Nov. 28 Borrowed $30,000 cash from Fargo Bank by signing a 60-day, 7%, $30,000 note payable. Dec. 31 Recorded an adjusting entry for accrued interest on the note to Fargo Bank. Year 2 _?__ Paid the amount due on the note to Fargo Bank at the maturity date. Problem 9-1A Part 1 Required: 1. Determine the maturity date for each of the three notes described. Locust NBR Bank Fargo Bank Maturity date

Answer 1

1)	Maturity date
			locust	NBR	fargo
	date of the note		19-May	8-Jul	28-Nov
	term of note		90	120	60
	maturity date		17-Aug	5-Nov	27-Jan
2)	interest due at maturity
		principal	*	Rate	*	time	=	interest
	locust	35,000	*	8%	*	90/360	=	700
	NBR	63,000	*	11%	*	120/360	=	2310
	Fargo	30,000	*	7%	*	60/360	=	350
3)	Amount in adjusting entry
				Fargo Bank
			principal	*	Rate	*	time	=	interest
interest to be acccrued in 2016			30,000	*	7%	*	33/360	=	193
4)	interest expense to be recorded in 2017
			principal	*	Rate	*	time	=	interest
interest to recorded in 2018			30,000	*	7%	*	27/360	=	158
	Journal entries
	Date	Accounting titles & Explanations				Debit	Credit
	2016
	20-Apr	inventory				35,500
		Accounts payable					35,500
	19-May	Accounts payable				35,500
		cash					500
		notes payable					35,000
	8-Jul	Cash				63,000
		notes payable					63,000
	17-Aug	notes payable				35,000
		interest expense				700
		cash					35,700
	5-Nov	notes payable				63,000
		interest expense				2,310
		cash					65,310
	28-Nov	Cash				30,000
		notes payable					30,000
	31-Dec	interest expense				193
		interest payable					193
	2017
	27-Jan	notes payable				30,000
		interest payable				193
		interest expense				158
		cash					30,350