Question

Required information [The following information applies to the questions displayed below) Tyrell Co. entered into the following transactions involving short-term liabilities Year 1 Apr. 20 Purchased $38,000 of merchandise on credit from Locust, terms n/30. May 19 Replaced the April 20 account payable to Locust with a 90-day, 7%, 535,200 note payable along with paying $3,000 in cash. July 8 Borrowed $60,000 cash from NSR Bank by signing a 120day, 12%, $60,000 note payable. ? Paid the amount due on the note to Locust at the maturity date. Pald the amount due on the note to NBR Bank at the maturity date. Nov. 28 Borrowed $36,000 cash from Fargo Bank by signing a 60-day, 8%, $36,000 note payable. Dec. 31 Recorded an adjusting entry for accrued interest on the note to Fargo Bank. Year 2 --- Paid the amount due on the note to Fargo Bank at the maturity date. 2. Determine the interest due at maturity for each of the three notes (Do not round your intermediate calculations. Use 360 days a year.) Principal X Rate Time - Interest NBR Bank Fargo Bank

Answer 1

Requirement 1	Year1	Issue Date	Days	Maturity Date
	Locust Note Maturity Date	19-May	90	17-Aug	12 days in May 30 days June 31 days in July 17days in Aug	=12+30+31+17
	NBR Bank Maturity Date	8-Jul	120	5-Nov	23 days in Jul 31 days in Aug 30 days in Sep 31 days in Oct 5 days in Nov	=23+31+30+31+5
	Year2
	Fargo Bank Maturity Date	28-Nov	60	27-Jan	2 days in Nov 31 days in Dec 27 days in Jan	=2+31+27
Requirement 2
	Principal	*	Rate	%	*	Time	=	Interest
Locust	$                        35,000	*	7	%	*	=90/360	=	$           613	=35000*7%*90/360
NBR Bank	$                        60,000	*	12	%	*	=120/360	=	$       2,400	=60000*12%*120/360
Fargo Bank	$                        36,000	*	8	%	*	=60/360	=	$           480	=36000*8%*60/360
Requirement 3
Year End Accrual Required For	Fargo Bank
	Principal	*	Rate	%	*	Time	=	Interest
Interest to be accrued in Year 1	$                        36,000	*	8	%	*	=33/360	=	$           264	=36000*8%*33/360
Requirement 4
Year End Accrual Required For	Fargo Bank
	Principal	*	Rate	%	*	Time	=	Interest
Interest to be accrued in Year 2	$                        36,000	*	8	%	*	=27/360	=	$           216	=36000*8%*27/360
Requirement 5
		Debit	Credit
20-Apr	Merchndise Inventory	$        38,000
	Accounts Payable-Locust		$         38,000
	Merchandise purchased on credit
19-May	Accounts Payable-Locust	$        38,000
	7% Note Payable		$         35,000
	Cash		$            3,000
	Accounts payable settled in exchange for cash and 7% note payable
8-Jul	Cash	$        60,000
	12% Note Payable		$         60,000
	Cash borrowed against note payable
17-Aug	7% Note Payable	$        35,000
	Interest Expense	$              613
	Cash		$         35,613
	Cash paid for 7% note
5-Nov	12% Note Payable	$        60,000
	Interest Expense	$          2,400
	Cash		$         62,400
	Cash paid for 12% note
28-Nov	Cash	$        36,000
	8% Note Payable		$         36,000
	Cash borrowed against note payable
31-Dec	Interest Expense	$              264
	Interest payable		$               264
	Interest acurred for the year end
27-Jan	8% Note Payable	$        36,000
	Interest payable	$              264
	Interest Expense	$              216
	Cash		$         36,480
	Cash paid for 8% note