Question

 Tyrell Co. entered into the following transactions involving short-term liabilities in 2016 and 2017.

 2016

 Apr. 20 Purchased S40,250 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 108 annual interest along with paying $5,250 in cash.

 July 8 Borroved S80,000 cash from NBR Bank by signing a 120-day, 98 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 Borroved $42,000 cash from Fargo Bank by signing a 60-day, 8s interest-bearing note with a face value of $42,000.

 Dec. 31 Recorded an adjusting entry for accrued interest on the note to Pargo 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.

 2. Determine the interest due at maturity for each of the three notes. (Do not round your intermediate calculations. Use 360 days a year.)

 3. Determine the interest expense to be recorded in the adjusting entry at the end of 2016. (Do not round your intermediate calculations. Use 360 days a year.)

 4. Determine the interest expense to be recorded in 2017. (Do not round your intermediate calculations. Use 360 days a year.)

 5.1 Prepare journal entries for all the preceding transactions and events for 2016.

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	*	10%	*	90/360	=	875
	NBR	80,000	*	9%	*	120/360	=	2400
	Fargo	42,000	*	8%	*	60/360	=	560
3)	Amount in adjusting entry
	42,000*8%*33/360
	308
				Fargo Bank
			principal	*	Rate	*	time	=	interest
interest to be acccrued in 2016			42,000	*	8%	*	33/360	=	308
4)	interest expense to be recorded in 2017
			principal	*	Rate	*	time	=	interest
interest to recorded in 2018			42,000	*	8%	*	27/360	=	252
	Journal entries
	Date	Accounting titles & Explanations				Debit	Credit
	2016
	20-Apr	inventory				40,250
		Accounts payable					40,250
	19-May	Accounts payable				40,250
		cash					5,250
		notes payable					35,000
	8-Jul	Cash				80,000
		notes payable					80,000
	17-Aug	notes payable				35,000
		interest expense				875
		cash					35,875
	5-Nov	notes payable				80,000
		interest expense				2,400
		cash					82,400
	28-Nov	Cash				42,000
		notes payable					42,000
	31-Dec	interest expense				308
		interest payable					308
	2017
	27-Jan	notes payable				42,000
		interest payable				308
		interest expense				252
		cash					42,560