Question

Required Information The following information applies to the questions displayed below.] Tyrell Co. entered into the following transactions involving short-term liabilities in 2016 and 2017 2016 Apr. 20 Purchased $38,500 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 8% annual interest along with paying $3,500 in cash July 8 Borrowed $57,000 cash from NBR Bank by signing a 120-day, 12% interest-bearing note with a face value of $57,000. ? Paid the amount due on the note to Locust at the naturity date. ? Paid the amount due on the note to NBR Bank at the maturity date. NOV. 28 Borrowed $33,000 cash from Fargo Bank by signing a 60-day, 7% interest-bearing note with a face value of $33,000 Dec. 31 Recorded an adjusting entry for accrued interest on the note to Fargo Bank 2017 27 Paid the amount due on the note to Fargo Bank at the maturity date

Answer 1

	Date	Account titles and explanation					Debit	Credit
	2016
	Apr. 20	Merchandise inventory					38500
		Accounts payable						38500
		(Purchased merchandise on credit)
	May. 19	Accounts payable					38500
		Note payable						35000
		Cash						3500
		(Replaced the amount due with a 8% note)
	July. 8	Cash					57000
		Note payable						57000
		(Borrowed from bank)
	Aug. 17	Note payable					35000
	(May 19+90 days)	Interest expense		(35000*8%*90/360)			700
		Cash						35700
		(Paid the note at maturity)
	Nov. 5	Note payable					57000
	(July 8+120 days)	Interest expense		(57000*12%*120/360)			2280
		Cash						59280
		(Paid the note at maturity)
	Nov. 28	Cash					33000
		Note payable						33000
		(Borrowed from bank)
	Dec. 31	Interest expense		(33000*7%*35/360)			225
		Interest payable
		(Interest accrued from Nov 28 to Dec 31-35 days)
	2017
	Jan. 25	Interest expense		(33000*7%*25/360)			160
	(Nov 28+60 days)	Interest payable		(33000*7%*25/360)			225
		Note payable					33000
		Cash						33385
		(Paid the note at maturity)