Question

Tyrell Co. entered into the following transactions involving short-term liabilities in 2017 and 2018.

2017

Apr.		20		Purchased $38,000 of merchandise on credit from Locust, terms n/30. Tyrell uses the perpetual inventory system.
May		19		Replaced the April 20 account payable to Locust with a 90-day, $35,000 note bearing 9% annual interest along with paying $3,000 in cash.
July		8		Borrowed $54,000 cash from NBR Bank by signing a 120-day, 10% interest-bearing note with a face value of $54,000.
__?__				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.
Nov.		28		Borrowed $30,000 cash from Fargo Bank by signing a 60-day, 7% 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.

2018

__?__

Paid the amount due on the note to Fargo Bank at the maturity date.

Required information [The following information applies to the questions displayed below.) Tyrell Co. entered into the following transactions involving short-term liabilities in 2017 and 2018. 2017 Apr. 20 Purchased $38,000 of merchandise on credit from Locust, terms n/30. Tyrell uses the perpetual inventory system. May 19 Replaced the April 20 account payable to Locust with a 90-day, $35,000 note bearing 9% annual interest along with paying $3,000 in cash. July 8 Borrowed $54,000 cash from NBR Bank by signing a 120-day, 10% interest-bearing note with a face value of $54,000. 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. Nov. 28 Borrowed $30,000 cash from Fargo Bank by signing a 60-day, 7% 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. 2018 ___ 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. 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	*	9%	*	90/360	=	788
	NBR	54,000	*	10%	*	120/360	=	1800
	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				38,000
		Accounts payable					38,000
	19-May	Accounts payable				38,000
		cash					3,000
		notes payable					35,000
	8-Jul	Cash				54,000
		notes payable					54,000
	17-Aug	notes payable				35,000
		interest expense				788
		cash					35,788
	5-Nov	notes payable				54,000
		interest expense				1,800
		cash					55,800
	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