Question

Required information

Problem 9-1A Short-term notes payable transactions and entries LO P1

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Tyrell Co. entered into the following transactions involving short-term liabilities.

Year 1

Apr.		20		Purchased $40,250 of merchandise on credit from Locust, terms n/30.
May		19		Replaced the April 20 account payable to Locust with a 90-day, 10%, $35,000 note payable along with paying $5,250 in cash.
July		8		Borrowed $80,000 cash from NBR Bank by signing a 120-day, 9%, $80,000 note payable.
___?___				Paid the amount due on the note to Locust at the maturity date.
___?___				Paid the amount due on the note to NBR Bank at the maturity date.
Nov.		28		Borrowed $42,000 cash from Fargo Bank by signing a 60-day, 8%, $42,000 note payable.
Dec.		31		Recorded an adjusting entry for accrued interest on the note to Fargo Bank.

Year 2

__?__

Paid the amount due on the note to Fargo Bank at the maturity date.

Problem 9-1A Part 5

5. Prepare journal entries for all the preceding transactions and events.

Answer 1

Solution:

Date	General Journal	Debit	Credit
20-Apr	Inventory	40250
	Accounts payable-Locust		40250
19-May	Accounts apayable-Locust	40250
	Notes payable-Locust		35000
	Cash		5250
08-Jul	Cash	80000
	Notes payable-NBR Bank		80000
17-Aug	Notes payable-Locust	35000
	Interest Expense (35000*10%*90/360)	875
	Cash		35875
05-Nov	Notes payable-NBR Bank	80000
	Interest Expense (80000*9%*120/360)	2400
	Cash		82400
28-Nov	Cash	42000
	Notes payable-Fargo Bank		42000
31-Dec	Interest Expense (42000*8%*33/360)	308
	Interest payable		308
27-Jan	Notes payable-Fargo Bank	42000
	Interst Payable	308
	Interest Expense (42000*8%*27/360)	252
	Cash		42560