Question

Nix Co. entered into the following transactions involving short-term liabilities in 2010 and 2011.
2010
Apr. 22 Purchased $6,000 of merchandise on credit from Wolf Products, terms are 1/10, n/30. Nix uses the perpetual inventory system.
May 23 Replaced the April 22 account payable to Wolf Products with a 60-day, $5,400 note bearing 8% annual interest along with paying $600 in cash.
July 15 Borrowed $8,500 cash from Autumn Bank by signing a 90-day, 8% interest-bearing note with a face value of $8,500.
___?____ Paid the amount due on the note to Wolf Products at maturity.
___?____ Paid the amount due on the note to Autumn Bank at maturity.
Dec. 6 Borrowed $9,600 cash from City Bank by signing a 90-day, 6% interest-bearing note with a face value of $9,600.
31 Recorded an adjusting entry for accrued interest on the note to City Bank.
2011
__?_____ Paid the amount due on the note to City Bank at maturity. (February of 2011 has 28 days.)
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 to be recorded in the adjusting entry at the end of 2010.
4. Determine the interest expense to be recorded in 2011.
5. Prepare journal entries for all the preceding transactions and events for years 2010 and 2011.


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  • CreatedMarch 18, 2015
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