Record each journal entry. transaction list 1. Purchased $38,000 of merchandise

Question

Record each journal entry.

transaction list 1. Purchased $38,000 of merchandise on credit from Locust, terms are 1/10, n/30. Tyrell uses the perpetual inventory system. 2. Replaced the April 20 account payable to Locust with a 90-day, $35,000 note bearing 8% annual interest along with paying $3,000 n cash. 3. Borrowed $69,000 cash from National Bank by signing a 120-day, 12% interest-bearing note with a face value of $69,000. 4. Paid the amount due on the note to Locust at the maturity date. 5. Paid the amount due on the note to National Bank at the maturity date. 6. Borrowed $27,000 cash from Fargo Bank by signing a 60-day, 8% interest-bearing note with a face value of $27,000. 7. Recorded an adjusting entry for accrued interest on the note to Fargo Bank.

Explanation / Answer

**Assuming 360 days in a year

Date Title Debit credit 1 Inventory 38,000 Accounts payable 38,000 [merchandise purchased on credit] 2 Accounts payable 38000 cash 3000 Note payable 35000 [Being part payment in cash and part by issuing note recorded] 3 cash 69000 Note payable 69000 [being amount borrowed] 4 Note payable 35000 Accrued Interest on note (35000*.08 * 90/360) 700 Cash 35700 [being not paid on due date] 5 Note payable 69000 Accrued Interest on note (69000*.12*120/360) 2760 Cash 71760 [being note paid on due date) 6 cash 27000 Note payable 27000 [being amount borrowed] 6 Interest expense   (27000*.08*60/360) 360 Interest payable /Accrued Interest on note 360

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