Warner Co. entered into the following transactions involving short term liabilities. Year 1 Required 1. Determine the
Question:
Warner Co. entered into the following transactions involving short term liabilities.
Year 1
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.
Transcribed Image Text:
Year 1 Apr. 22 May 23 July 15 ? ? Dec. 6 31 Year 2 ? Purchased $5,000 of merchandise on credit from Fox-Pro, terms n/30. Replaced the April 22 account payable to Fox-Pro with a 60-day, 15%, $4,600 note payable along with paying $400 in cash. 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. Borrowed $8,000 cash from City Bank by signing a 45-day, 9%, $8,000 note payable. Recorded an adjusting entry for accrued interest on the note to City Bank. Paid the amount due on the note to City Bank at maturity.
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Based on the data provided in the image well address each of the required points to determine the maturity dates the interest due at maturity for each note and the interest expenses for Year 1 and Yea...View the full answer
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