Question

Required information [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 $36,000 of merchandise on credit from Locust, terms n/30. May 19 Replaced the April 20 account payable to Locust with a 90-day, 9%, $35,000 note payable along with paying $1,880 in cash. July 8 Borrowed 557,000 cash from NBR Bank by signing a 120-day, 11%, $57,000 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 $27,000 cash from Fargo Bank by signing a 60-day, 6%, $27,000 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. Required: 1. Determine the maturity date for each of the three notes described. Locust NBR Bank Fargo Bank Maturity date Prev 1 2 .5 of 6 Next >

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	57,000	*	11%	*	120/360	=	2090
	Fargo	27,000	*	6%	*	60/360	=	270
3)	Amount in adjusting entry
				Fargo Bank
			principal	*	Rate	*	time	=	interest
interest to be acccrued in 2016			27,000	*	6%	*	33/360	=	149
4)	interest expense to be recorded in 2017
			principal	*	Rate	*	time	=	interest
interest to recorded in 2018			27,000	*	6%	*	27/360	=	122
	Journal entries
	Date	Accounting titles & Explanations				Debit	Credit
	2016
	20-Apr	inventory				36,000
		Accounts payable					36,000
	19-May	Accounts payable				36,000
		cash					1,000
		notes payable					35,000
	8-Jul	Cash				57,000
		notes payable					57,000
	17-Aug	notes payable				35,000
		interest expense				788
		cash					35,788
	5-Nov	notes payable				57,000
		interest expense				2,090
		cash					59,090
	28-Nov	Cash				27,000
		notes payable					27,000
	31-Dec	interest expense				149
		interest payable					149
	2017
	27-Jan	notes payable				27,000
		interest payable				149
		interest expense				122
		cash					27,270