Question

21 Required information (The following information applies to the questions displayed below.) Part 1 of 5 Tyrell Co. entered into the following transactions involving short-term liabilities in 2016 and 2017 points 12012200 2016 Apr. 20 Purchased $37,500 of merchandise on credit fron Locust, terns 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 annual interest along with paying $2,500 in cash. July 8 Borrowed $51,000 cash from NBR Bank by signing a 120-day, 12% interest-bearing note with a face value of $51.000. -- 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 $27,000 cash from Fargo Bank by signing a 60-day, 6% interest-bearing note with a face value of $27,000. 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 Maturity date Aug 17, 2016 NBR Bank Nov 5, 2016 Fargo Bank Jan 27, 2017

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	*	9%	*	90/360	=	788
	NBR	51,000	*	12%	*	120/360	=	2040
	Fargo	27,000	*	6%	*	60/360	=	270
3)	Amount in adjusting entry
				Fargo Bank
			principal	*	Rate	*	time	=	interest
interest to be acccrued in 2016			27,000	*	6%	*	33/360	=	149
4)	interest expense to be recorded in 2017
	198
			principal	*	Rate	*	time	=	interest
interest to recorded in 2018			27,000	*	6%	*	27/360	=	122
	Journal entries
	Date	Accounting titles & Explanations				Debit	Credit
	2016
	20-Apr	inventory				37,500
		Accounts payable					37,500
	19-May	Accounts payable				37,500
		cash					2,500
		notes payable					35,000
	8-Jul	Cash				51,000
		notes payable					51,000
	17-Aug	notes payable				35,000
		interest expense				788
		cash					35,788
	5-Nov	notes payable				51,000
		interest expense				2,040
		cash					53,040
	28-Nov	Cash				27,000
		notes payable					27,000
	31-Dec	interest expense				148.5
		interest payable					148.5
	2017
	27-Jan	notes payable				27,000
		interest payable				149
		interest expense				122
		cash					27,270