Question

Tyrell Co. entered into the following transactions involving short-term liabilities in 2016 and 2017 2016 Apr. 20 Purchased $37,000 of merchandise on credit from Locust, terms n/30. Tyrell uses the perpetual May 19 Replaced the April 20 account payable to Locust with a 90-day, S35.000 note bearing 8% annual July 8 Borrowed $69,000 cash from NBR Bank by signing a 120-day, 10% interest-bearing note with a face inventory system. interest along with paying $2,000 in cash. value of $69, 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 $21,000 cash from Fargo Bank by signing a 60-day, 7% interest-bearing note with a face Dec. 31 Recorded an adjusting entry for accrued interest on the note to Fargo Bank 2017 value of $21,000. 7 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 NBR Bank Fargo Bank Matuity 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	69,000	*	10%	*	120/360	=	2300
	Fargo	21,000	*	7%	*	60/360	=	245
3)	Amount in adjusting entry
	42,000*8%*33/360
	135
				Fargo Bank
			principal	*	Rate	*	time	=	interest
interest to be acccrued in 2016			21,000	*	7%	*	33/360	=	135
4)	interest expense to be recorded in 2017
	110
			principal	*	Rate	*	time	=	interest
interest to recorded in 2018			21,000	*	7%	*	27/360	=	110
	Journal entries
	Date	Accounting titles & Explanations				Debit	Credit
	2016
	20-Apr	inventory				37,000
		Accounts payable					37,000
	19-May	Accounts payable				37,000
		cash					2,000
		notes payable					35,000
	8-Jul	Cash				69,000
		notes payable					69,000
	17-Aug	notes payable				35,000
		interest expense				700
		cash					35,700
	5-Nov	notes payable				69,000
		interest expense				2,300
		cash					71,300
	28-Nov	Cash				21,000
		notes payable					21,000
	31-Dec	interest expense				135
		interest payable					135
	2017
	27-Jan	notes payable				21,000
		interest payable				135
		interest expense				110
		cash					21,245