Question

Assignment Saved Help Save & Exit Check 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 $40,25 of merchandise on credit from Locust, terke /30. May 19 Replaced the April 20 account payable to Locust with a 90-day, 106, $35,000 note payable along with paying $5,250 in cash. July 8 Borrowed $80,000 cash from NBR Bank by signing a 120-day, 9%, $80,000 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 $42,000 cash from Fargo Bank by signing a 60-day, 8%, 542,000 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 naturity date.

Answer 1

3)

Year End Accrual Required for:	Fargo Bank
	Principal	*	Rate			Time	=	Interest
Interest to be accrued in Year 1	$42000	*	8	%	*	33/360	=	$308

From No 28 to Dec 31= 33 days

4)

Year End Accrual Required for:	Fargo Bank
	Principal	*	Rate			Time	=	Interest
Interest to be accrued in Year 2	$42000	*	8	%	*	27/360	=	$252

Time= 60 days-33 days= 27 days

Date	General Journal	Debit	Credit
Apr 20, Year 1	Merchandise inventory	$40250
	Accounts payable- Locust		$40250
	(To record merchandise inventory purchased on credit)
May 19, Year 1	Accounts payable- Locust	$40250
	Notes payable- Locust ($40250-5250)		$35000
	Cash		$5250
	(To record replaced accounts payable by signing a notes payable along with paying in cash)
July 8, Year 1	Cash	$80000
	Notes payable- NBR Bank		$80000
	(To record cash borrowed by signing a note)
Aug 17, Year 1	Notes payable- Locust	$35000
	Interest expense (35000*10%*90/360)	$875
	Cash		$35875
	(To record amount paid)
Nov 5, Year 1	Notes payable- NBR Bank	$80000
	Interest expense (80000*9%*120/360)	$2400
	Cash		$82400
	(To record amount paid)
Nov 28, Year 1	Cash	$42000
	Notes payable- Fargo Bank		$42000
	(To record cash borrowed by signing a note)
Dec 31, Year 1	Interest expense	$308
	Interest payable		$308
	(To record accrued interest)
Jan 27, Year 2	Notes payable- Fargo Bank	$42000
	Interest payable	$308
	Interest expense	$252
	Cash		$42560
	(To record amount paid)

Maturity date of May 19 Notes payable- Locust= May 19+90 days

= May 19+12+30+31+17= Aug 17

Maturity date of July 8 Notes payable- NBR Bank= July 8+120 days

= July 8+23+31+30+31+5= Nov 5

Maturity date of Nov 28 Notes payable- Fargo Bank= Nov 28+60 days

= Nov 28+2+31+27= Jan 27

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