Tyrell Co. entered into the following transactions involving short-term liabilit
ID: 2474945 • Letter: T
Question
Tyrell Co. entered into the following transactions involving short-term liabilities in 2014 and 2015. 2014 Apr. 20 Purchased $36,000 of merchandise on credit from Locust, terms are 1/10, 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 $1,000 in cash. July 8 Borrowed $69,000 cash from National Bank by signing a 120-day. 11% interest-bearing note with a face 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 National Bank at the maturity date. Nov. 28 Borrowed $24,000 cash from Fargo Bank by signing a 60-day. 7% interest-bearing note with a face value of $24,000. Dec. 31 Recorded an adjusting entry for accrued interest on the note to Fargo Bank. 2015 Paid the amount due on the note to Fargo Bank at the maturity date. value: 3.57 points Required: 1. Determine the maturity date for each of the three notes described. Value: 3.57 points Determine the due at maturity for each of the three notes. (Do not round your intermediate calculations. Use 360 days a year.)Explanation / Answer
2014
Apr. 20
Purchased $36,000 of merchandise on credit from Frier, terms are 1/10, n/30. Tytus uses the perpetual inventory system.
Dr Merchandise Inventory 36,000
Cr Accounts Payable 36,000
May 19
Replaced the April 20 account payable to Locust with a 90-day, $35,000 note bearing 8% annual interest along with paying $1,000 in cash.
Dr Accounts Payable 36,000
Cr Notes Payable 35,000
Cr Cash 1,000
July 8
Borrowed $69,000 cash from National Bank by signing a 120-day, 11% interest-bearing note with a face value of $69,000.
Dr Cash 69,000
Cr Notes Payable 69,000
2.
Aug 17
Paid the amount due on the note to Locust at the maturity date.
35,000 x 8% x 90/360 = $600 interest
Dr Notes Payable 35,000
Dr Interest Expense 700
Cr Cash 35,700
Nov. 5
Paid the amount due on the note to National Bank at the maturity date.
69,000 x 1% x 120/360 = $2,530 interest
Dr Notes Payable 69,000
Dr Interest Expense 2,530
Cr Cash 71,530
3.
Nov. 28
Borrowed $24,000 cash from Fargo
Bank by signing a 60-day, 7% interest-bearing note with a face value of $24,000.
Dr Cash 24,000
Cr Notes Payable 24,000
Dec. 31 Recorded an adjusting entry for accrued interest on the note to UMB Bank.
33 days of interest has accrued
24,000 x 7% x 33/360 = $154 accrued interest
Dr Interest Expense 154
Cr Interest Payable 154
2015
4.
Jan. 27
Paid the amount due on the note to Fargo Bank at the maturity date.
27 more days of interest expense has accrued.
24,000 x 7% x 27/360 = $126 more accrued interest
Dr Notes Payable 24,000
Dr Interest Payable 154
Dr Interest Expense 126
Cr Cash 24,280
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