In: Accounting
During 2011 and 2012, Data Resources, Inc. engaged in financial
transactions that involved short-term liabilities.
1. Using the financial transaction information provided
below, determine the following. Record your responses on page
2.
a. All three note maturity dates.
b. The interest due on all three notes on the dates
they mature, assuming a 360-day year.
c. The interest expense for the 2011 year-end adjusting
entry.
d. For distinguished performance, determine the
interest expense for 2012.
Note: The company uses a perpetual inventory
system.
2011
Mar 19 Purchased $41,250 worth of merchandise from
Chipcom, on credit. Terms: 1/10, n/30.
April 29 Replaced the Mar 19 account payable to Chipcom
with a 120-day, $35,000 note at 7% annual interest, plus a cash
payment of $6,250.
Jun 16 Borrowed $55,000 cash from Sunnyvale Bank.
Signed a 90-day, 8% interest-bearing note, with a $55,000 face
value.
? Paid Chipcom the amount due on the note on the date of
maturity.
? Paid Sunnyvale Bank the amount due on the note on the date of
maturity.
Oct 30 Borrowed $18,000 cash from UCB Bank. Signed a
90-day, 7% interest-bearing note, with a $18,000 face value.
Dec 31 Recorded an accrued interest adjustment on the
UCB Bank note.
2012
? Paid UCB Bank the amount due on
the note on the date of maturity.
[Record your answers to item 1 here.]
2. Prepare journal entries for all 2011 and 2012 events and transactions for Data Resources, Inc.