Tytus Co. entered into the following transactions involving short-term liabilities in 2010 and 2011.
2010 | |
Apr.20 | Purchased $38,500 of merchandise on credit from Frier, terms are 1/10, n/30. Tytus uses the perpetual inventory system. |
May 19 | Replaced the April 20 account payable to Frier with a 90-day, $30,000 note bearing 9% annual interest along with paying $8,500 in cash. |
July 8 | Borrowed $60,000 cash from Community Bank by signing a 120-day, 10% interest-bearing note with a face value of $60,000. |
? | Paid the amount due on the note to Frier at the maturity date. |
? | Paid the amount due on the note to Community Bank at the maturity date. |
Nov. 28 | Borrowed $21,000 cash fromUMB Bank by signing a 60-day, 8% interest-bearing note with a face value of $21,000. |
Dec. 31 | Recorded an adjusting entry for accrued interest on the note to UMB Bank. |
2011 | |
? | Paid the amount due on the note to UMB 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. (Assume a 360-day year.)
3.Determine the interest expense to be recorded in the adjusting entry at the end of 2010.
4.Determine the interest expense to be recorded in 2011.
5.Prepare journal entries for all the preceding transactions and events for years 2010 and 2011.
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