Question

Tyrell Co. entered into the following transactions involving short-term liabilities. Year 1 Apr. 20 Purchased $36,000 of merchandise on credit from Locust, terms n/30. May 19 Replaced the April 20 account payable to Locust with a 90-day, 9%, $35,000 note payable along with paying $1,000 in cash. July 8 Borrowed $57,000 cash from NBR Bank by signing a 120-day, 11%, $57,000 note payable. __

Answer 1

Answer:

the requirements are missing, so I looked for similar questions:

1) determine the maturity date of these transactions

2) determine the interest due at maturity

1) maturity dates of the notes:

note                                  Locust                 NBR bank

note issued on                May 19                  July 8

term of note                    90 days                120 days

maturity date                  August 17              Nov. 5

2) interest due at maturity

Locust note = $35,000 x 9% x 90/360 = $787.50

NBR bank note = $57,000 x 11% x 120/360 = $2,090

the journal entries should be:

August 17, 202x, note paid to Locust

Dr Notes payable 35,000

Dr Interest expense 787.50

    Cr Cash 35,787.50

November 5, 202x, note paid to NBR Bank

Dr Notes payable 57,000

Dr Interest expense 2,090

    Cr Cash 59,090