Question

Tyrell Co. entered into the following transactions involving short-term liabilities in 2016 and 2017.

2016

Apr.		20		Purchased $40,000 of merchandise on credit from Locust, terms n/30. Tyrell uses the perpetual inventory system.
May		19		Replaced the April 20 account payable to Locust with a 90-day, $35,000 note bearing 8% annual interest along with paying $5,000 in cash.
July		8		Borrowed $60,000 cash from NBR Bank by signing a 120-day, 12% interest-bearing note with a face value of $60,000.
__?__				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 $21,000 cash from Fargo Bank by signing a 60-day, 7% interest-bearing note with a face value of $21,000.
Dec.		31		Recorded an adjusting entry for accrued interest on the note to Fargo Bank.

2017

__?__

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

Problem 9-1A Part 5

5.1 Prepare journal entries for all the preceding transactions and events for 2016. (Do not round your intermediate calculations.)
  

5.2 Prepare journal entries for all the preceding transactions and events for 2017. (Do not round your intermediate calculations.)

Answer 1

It is assumed that Number of days in a year = 360 Days

Required 5.1 :
Date	General Journal	Debit	Credit
2016
Apr-20	Merchandise Inventory	$ 40,000
	Accounts Payable - Locust		$ 40,000
	(To record Purchase of Merchandise on Credit from Locust)
May-19	Accounts Payable - Locust	$ 40,000
	Notes Payable - Locust		$ 35,000
	Cash		$ 5,000
	(To record Replaced the April 20 accounts payable to Locust )
Jun-08	Cash	$ 60,000
	Notes Payable - NBR Bank		$ 60,000
	(To record Borrowed Cash from NBR Bank )
Aug-17	Notes Payable - Locust	$ 35,000
	Interest Expense ($35,000*8%*90/360)	$ 700
	Cash ($35,000 +$700 )		$ 35,700
	(To record Amount due on Note to Locust at Maturity Date )
Nov-05	Notes Payable - NBR Bank	$ 60,000
	Interest Expense ($60,000*12%*120/360)	$ 2,400
	Cash ($60,000 +$2,400 )		$ 62,400
	(To record Amount due on Note to Locust at Maturity Date )
Nov-28	Cash	$ 21,000
	Notes Payable - Fargo Bank		$ 21,000
	(To record Borrowed Cash from Fargo Bank )
Dec-31	Interest Expense ($21,000*7%*33/360 )	$ 134.75
	Interest Payable		$ 134.75
	(To record Adjusting entry Accrued Interest on Note To Fargo Bank )

Required 5.2 :
Date	General Journal	Debit	Credit
2017
Jan-27	Notes Payable - Fargo Bank	$ 21,000
	Interest Payable ($21,000*7%*33/360 )	$ 134.75
	Interest Expense ($21,000*7%*27/360 )	$ 110.25
	Cash ($21,000 +$134.75 +$ 110.25 )		$ 21,245
	(To record Amount due on Note to Fargo Bank at Maturity Date )