Warner Co. entered into the following transactions involving short-term liabilities. Year 1 Apr. 22 Purchased $5,000 of merchandise on credit from Fox-Pro, terms n∕30. May 23 Replaced the April 22 account payable to Fox-Pro with a 60-day, 15% $4,600 note payable along with paying $400 in cash. July 15 Borrowed $12,000 cash from Spring Bank by signing a 120-day, 10%, $12,000 note payable. ___?___ Paid the amount due on the note to Fox-Pro at maturity. ___?___ Paid the amount due on the note to Spring Bank at maturity. Dec. 6 Borrowed $8,000 cash from City Bank by signing a 45-day, 9%, $8,000 note payable. 31 Recorded an adjusting entry for accrued interest on the note to City Bank. Year 2 ___?___ Paid the amount due on the note to City Bank at maturity. Required 1. Determine the maturity date for each of the three notes described. 2. Determine the interest due at maturity for each of the three notes. Assume a 360-day year. 3. Determine the interest expense recorded in the adjusting entry at the end of Year 1. 4. Determine the interest expense recorded in Year 2. 5. Prepare journal entries for all the preceding transactions and events.
Warner Co. entered into the following transactions involving short-term liabilities.
Year 1
Apr. 22 Purchased $5,000 of merchandise on credit from Fox-Pro, terms n∕30.
May 23 Replaced the April 22 account payable to Fox-Pro with a 60-day, 15% $4,600 note payable
along with paying $400 in cash.
July 15 Borrowed $12,000 cash from Spring Bank by signing a 120-day, 10%, $12,000 note payable.
___?___ Paid the amount due on the note to Fox-Pro at maturity.
___?___ Paid the amount due on the note to Spring Bank at maturity.
Dec. 6 Borrowed $8,000 cash from City Bank by signing a 45-day, 9%, $8,000 note payable.
31 Recorded an
Year 2
___?___ Paid the amount due on the note to City Bank at maturity.
Required
1. Determine the maturity date for each of the three notes described.
2. Determine the interest due at maturity for each of the three notes. Assume a 360-day year.
3. Determine the interest expense recorded in the adjusting entry at the end of Year 1.
4. Determine the interest expense recorded in Year 2.
5. Prepare
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