Question

Week 7. Chapter 11 Required information The following information applies to the questions displayed below Tyrell Co. entered into the following transactions involving short-term abilities Apr. 20 Purchased $39.900 ot merchandise on credit from Locust, s /so. 19 Replaced the pill 20 count payahle Do Lout with 90- y. . $33,000 te payable along with Don 39.500 1n cash. July Sorrowed 351.000 cash from MR Bank by ating a 20-a 111.991.000 payable 10 the gunue on Benetto T h e and the anons durante nesto NES Bank at the aty re Nov 20 BOE 27,000 s tron Faxe Bank by signing 50-day 527,000 note payable Dereced e n teesta heter Bank Year 2 Paid the count due on the note to go Bank at the naturity . 4. Determine the interest expense recorded in Year 2 Do not round intermediate calculations and round your final answers to nearest whole dollar. Use 360 days a year.) Year end accrual required for x Rate Fargo Bank Time interest

Answer 1

Fargo Bank :

Principal= $ 27,000

rate = 8 %

Days = 60 days

For year 1, Interest days = 33 days ( From November 28 to December 31)

For year 2, Interest days = 27 days ( From January 1 to January 27 )

Total interest days = 60 days (33+27 days )

Year end Accrual required for	Fargo Bank
	Principal		Rate		Time		Interest
Interest to be recorded in Year 2	$ 27,000		8%		27/360		$ 162 {27000*8%*27/360}

Explanation :
Interest on Fargo Note in Year 2 :
Total interest for note ($27,000*8%*60/360)	$ 360
Fraction of term in year 2	27/60
Interest Expense in Year 2 ($360*27/60)	$ 162