Question

Required information Problem 9-1A Short-term notes payable transactions and entries LO P1 [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 $35,500 of merchandise on credit from Locust, terms n/30 19 Replaced the April 20 account payable to Locust with a 90-day, 8%, $35,000 note payable along with paying $500 in cash 8 Borrowed $54,000 cash from NBR Bank by signing a 120-day, 10% , $54,000 note payable 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 May July Nov. 28 Borrowed $27,000 cash from Fargo Bank by signing a 60-day, 8% , $ 27 ,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 Problem 9-1A Part 1 Required: 1. Determine the maturity date for each of the three notes described Locust Fargo Bank NBR Bank Maturity date

Answer 1

1) Maturity Date

	Locust	NBR Bank	Fargo Bank
Maturity Date	17 August	5 November	27 January

2) calculate interest

	Principal	*	Rate	*	Time	=	Interest
Locust	35500	*	8%	*	90/360	=	710
NBR Bank	54000	*	10%	*	120/360	=	1800
Fargo Bank	27000	*	8%	*	60/360	=	360

3) calculate interest

	Principal	*	Rate	*	Time	=	Interest
Interest to be accrued in year 1	27000	*	8%	*	33/360	=	198

4) calculate interest

	Principal	*	Rate	*	Time	=	Interest
Interest to be recorded in Year 2	27000	*	8%		27/360	=	162