Question

In: Accounting

During 2011 and 2012, Data Resources, Inc. engaged in financial transactions that involved short-term liabilities. 1.  ...

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.

Solutions

Expert Solution

Maturity

Interest

Entries


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