Ch 11 Homework P1 3

Topics: Interest, Liability, Adjusting entries Pages: 2 (634 words) Published: April 14, 2015
Chapter 11 Homework

Page 1 of 2

[The following information applies to the questions displayed below.]

Tyrell Co. entered into the following transactions involving short-term liabilities in 2012 and 2013. 2012
Apr. 20 Purchased $36,500 of merchandise on credit from Locust, terms are 1/10, 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 7% annual interest along with paying $1,500 in cash.
July 8 Borrowed $60,000 cash from National Bank by signing a 120-day, 11% 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 National Bank at the maturity date. Nov. 28 Borrowed $36,000 cash from Fargo Bank by signing a 60-day, 6% interest-bearing note with a face value of $36,000.

Dec. 31 Recorded an adjusting entry for accrued interest on the note to Fargo Bank. 2013
__?__ Paid the amount due on the note to Fargo Bank at the maturity date.

1.

award:

8.00 points

Problems? Adjust credit for all students.

3. Determine the interest expense to be recorded in the adjusting entry at the end of 2012. (Do not round your intermediate calculations. Use 360 days a year.)
Year end accrual required for:

Fargo Bank
Principal

x

Rate

x

Time

=

Total through maturity

$

36,000

x

6

%

x

60/360

=

$

Interest
360+/-1

Interest to be accrued in 2012

$

36,000

x

6

%

x

33/360

=

$

198+/-1

rev: 04_15_2014_QC_48334

Explanation:

Accrued interest on Fargo note at the end of 2012
Total interest for note
Fraction of term in 2012

$

360
33/60

Accrued interest expense

$

198

references

2.

ebook & resources

award:

8.00 points

Problems? Adjust credit for all students.

4. Determine the interest expense to be recorded in 2013. (Do not round your intermediate...
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