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Tyrell Co. entered into the following transactions involving short-term liabilities in 2007 and 2008.
2007 Apr. 20 Purchased $40,250 of merchandise on credit from Locust, terms are 1/10, n/30. Tyrell uses the perpetual inventory system.
Merchandise Inventory Dr. 40250
Account Payable- Locust Cr 40250
May 19 Replaced the April 20 account payable to Locust with a 90-day, $35,000 note bearing 10% annual interest along with paying $5,250 in cash.
Account Payable- Locust DR. 40250
10% Notes Payable Cr. 35000
Cash Cr. 5250
July 8 Borrowed $80,000 cash from National Bank by signing a 120-day, 9% interest-bearing note with a face value of $80,000.
Cash Dr. 80000
9% Notes Payable Cr. 80000
_Aug 17___ Paid the amount due on the note to Locust at the maturity date.
10% Notes Payable Dr. 35000
Interest Expenses Dr. 875
Cash Cr. 35875
(35000*.1/360 x 90)
_Nov 5___ Paid the amount due on the note to National Bank at the maturity date.
9% Notes Payable Dr. 80000
Interest Expenses Dr. 2400
Cash Cr. 82400
(80000*.09/360 x120)
Nov. 28 Borrowed $42,000 cash from Fargo Bank by signing a 60-day, 8% interest-bearing note with a face value of $42,000.
Cash Dr. 42000
8% Notes Payable Cr. 42000
Dec. 31 Recorded an adjusting entry for accrued interest on the note to Fargo Bank.
Interest expenses Dr 308
Interest payable Cr 308
42000 x .08/360 x 33
2008 Jan 27 Paid the amount due on the note to Fargo Bank at the maturity date.
8% Notes Payable Dr. 42000
Interest payable Dr. 308
Interest Expenses Dr. 252
Cash Cr. 42560
(42000*.08/360*27)
Prepare journal entries for all the preceding transactions
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