Tyrell Co. entered into the following transactions involving short-term liabilit
ID: 2529481 • Letter: T
Question
Tyrell Co. entered into the following transactions involving short-term liabilities in 2016 and 2017.
2016
Apr.
20
Purchased $40,250 of merchandise on credit from Locust, terms 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 10% annual interest along with paying $5,250 in cash.
July
8
Borrowed $80,000 cash from NBR Bank by signing a 120-day, 9% interest-bearing note with a face value of $80,000.
___?___
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 $42,000 cash from Fargo Bank by signing a 60-day, 8% interest-bearing note with a face value of $42,000.
Dec.
31
Recorded an adjusting entry for accrued interest on the note to Fargo Bank.
2017
__?__
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
Apr.
20
Purchased $40,250 of merchandise on credit from Locust, terms 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 10% annual interest along with paying $5,250 in cash.
July
8
Borrowed $80,000 cash from NBR Bank by signing a 120-day, 9% interest-bearing note with a face value of $80,000.
___?___
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 $42,000 cash from Fargo Bank by signing a 60-day, 8% interest-bearing note with a face value of $42,000.
Dec.
31
Recorded an adjusting entry for accrued interest on the note to Fargo Bank.
Principal Rate x Time Interest Locust NBR Bank Fargo BankExplanation / Answer
1 locust nbr bank fargo bank maturity date 17-Aug-16 5-Nov-16 27-Jan-17 2 principal rate time interest locust 35000 10% 0.25 875 nbr 80000 9% 0.333333 2400 fargo 42000 8% 0.166667 560 3 fargo bank interest to be recorded in 2016 42000 8% 0.091667 308 4 interest to be recorded in 2017 42000 8% 0.075 252 5 date general journal Debit credit Apr 20 2016 inventory 40250 accounts payable 40250 19-May-16 accounts payable 40250 notes payable 35000 cash 5250 Jul08,2016 cash 80000 notes payable 80000 Aug 17,2016 interest expense 875 notes payable 35000 cash 35875 05-Nov-16 interest expense 2400 notes payable 80000 cash 82400 nov 28,2016 cash 42000 notes payable 42000 31-Dec-16 interest expense 308 interest payable 308 27-Jan-17 interest payable 308 interest expense 252 notes payable 42000 cash 42560
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