{"id":187381,"date":"2025-02-04T09:27:10","date_gmt":"2025-02-04T09:27:10","guid":{"rendered":"https:\/\/learnexams.com\/blog\/?p=187381"},"modified":"2025-02-04T09:27:13","modified_gmt":"2025-02-04T09:27:13","slug":"the-following-information-applies-to-the-questions-displayed-below","status":"publish","type":"post","link":"https:\/\/www.learnexams.com\/blog\/2025\/02\/04\/the-following-information-applies-to-the-questions-displayed-below\/","title":{"rendered":"The following information applies to the questions displayed below"},"content":{"rendered":"\n<p>[The following information applies to the questions displayed below]<br>Tyrell Co. entered into the following transactions involving short-term liabilities in 2014 and 2015<br>2014<br>Apr. 20 Purchased $36,000 of merchandise on credit from Locust, terms are 1\/10, 1\/30 Tyrell uses the<br>perpetual inventory system May 19 Replaced the April 20 account payable to Locust with a 90-day, $35,000 note bearing 9% annual<br>interest along with paying $1,000 in cash. July 8 Borrowed $66,000 cash from National Bank by signing a 120-day, 11% interest -bearing note with a face value of $66.000<br>7 Paid the smount due on the note to Locust at the maturity date.<br>Paid the amount due on the note to National Bank at the maturity date.<br>Nov. 28 Borrowed $30,000 cash from Fargo Bank by signing a 60-day, 7% interest-bearing note with a<br>face value of $30.000.<br>Dec. 31 Recorded an adjusting entry for accrued interest on the note to Fargo Bank<br>2015<br>Paid the amount due on the note to Fargo Bank at the maturity date.<\/p>\n\n\n\n<p><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-ast-global-color-6-color\"><strong>The Correct Answer and Explanation is :<\/strong><\/mark><\/p>\n\n\n\n<p>Tyrell Co.&#8217;s transactions in 2014 and 2015 involving short-term liabilities are as follows:<\/p>\n\n\n\n<p><strong>2014<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>April 20<\/strong>: Purchased $36,000 of merchandise on credit from Locust, with terms 1\/10, n\/30.<\/li>\n\n\n\n<li><strong>May 19<\/strong>: Replaced the April 20 account payable to Locust with a 90-day, $35,000 note bearing 9% annual interest, and paid $1,000 in cash.<\/li>\n\n\n\n<li><strong>July 8<\/strong>: Borrowed $66,000 cash from National Bank by signing a 120-day, 11% interest-bearing note.<\/li>\n\n\n\n<li><strong>August 17<\/strong>: Paid the amount due on the note to Locust at maturity.<\/li>\n\n\n\n<li><strong>November 5<\/strong>: Paid the amount due on the note to National Bank at maturity.<\/li>\n\n\n\n<li><strong>November 28<\/strong>: Borrowed $30,000 cash from Fargo Bank by signing a 60-day, 7% interest-bearing note.<\/li>\n\n\n\n<li><strong>December 31<\/strong>: Recorded an adjusting entry for accrued interest on the note to Fargo Bank.<\/li>\n<\/ul>\n\n\n\n<p><strong>2015<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>January 27<\/strong>: Paid the amount due on the note to Fargo Bank at maturity.<\/li>\n<\/ul>\n\n\n\n<p><strong>Explanation:<\/strong><\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>April 20 Purchase<\/strong>: Tyrell Co. bought merchandise worth $36,000 on credit with terms 1\/10, n\/30. This means they could avail a 1% discount ($360) if paid within 10 days, reducing the payable amount to $35,640. However, since the payable was replaced with a note on May 19, it&#8217;s implied that the discount was not utilized.<\/li>\n\n\n\n<li><strong>May 19 Note Issuance<\/strong>: The company replaced the $36,000 account payable with a $35,000 note and paid $1,000 in cash. This action settled the original payable. The 90-day note has a 9% annual interest rate. The interest for 90 days is calculated as follows: [<br>\\text{Interest} = \\$35,000 \\times 9\\% \\times \\frac{90}{365} = \\$776.71<br>]<\/li>\n\n\n\n<li><strong>July 8 Loan<\/strong>: Tyrell Co. borrowed $66,000 from National Bank via a 120-day note with an 11% annual interest rate. The interest for 120 days is: [<br>\\text{Interest} = \\$66,000 \\times 11\\% \\times \\frac{120}{365} = \\$2,386.85<br>]<\/li>\n\n\n\n<li><strong>August 17 Payment<\/strong>: The 90-day note to Locust matured on August 17 (90 days from May 19). Tyrell Co. paid the principal of $35,000 plus the accrued interest of $776.71, totaling $35,776.71.<\/li>\n\n\n\n<li><strong>November 5 Payment<\/strong>: The 120-day note to National Bank matured on November 5 (120 days from July 8). The company paid the principal of $66,000 plus the accrued interest of $2,386.85, totaling $68,386.85.<\/li>\n\n\n\n<li><strong>November 28 Loan<\/strong>: Tyrell Co. borrowed $30,000 from Fargo Bank via a 60-day note with a 7% annual interest rate. The interest for 60 days is: [<br>\\text{Interest} = \\$30,000 \\times 7\\% \\times \\frac{60}{365} = \\$345.21<br>]<\/li>\n\n\n\n<li><strong>December 31 Adjusting Entry<\/strong>: By December 31, 33 days of the 60-day note had elapsed. The accrued interest is: [<br>\\text{Accrued Interest} = \\$30,000 \\times 7\\% \\times \\frac{33}{365} = \\$189.86<br>] This amount was recorded as an adjusting entry to recognize the interest expense incurred up to year-end.<\/li>\n\n\n\n<li><strong>January 27 Payment<\/strong>: The 60-day note to Fargo Bank matured on January 27, 2015. Tyrell Co. paid the principal of $30,000 plus the total interest of $345.21, totaling $30,345.21. Since $189.86 of this interest was accrued in 2014, the remaining $155.35 was recognized as interest expense in 2015.<\/li>\n<\/ol>\n\n\n\n<p>These transactions illustrate Tyrell Co.&#8217;s management of short-term liabilities through trade credit, promissory notes, and bank loans, along with the associated interest calculations and accounting entries.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>[The following information applies to the questions displayed below]Tyrell Co. entered into the following transactions involving short-term liabilities in 2014 and 20152014Apr. 20 Purchased $36,000 of merchandise on credit from Locust, terms are 1\/10, 1\/30 Tyrell uses theperpetual inventory system May 19 Replaced the April 20 account payable to Locust with a 90-day, $35,000 note [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[25],"tags":[],"class_list":["post-187381","post","type-post","status-publish","format-standard","hentry","category-exams-certification"],"_links":{"self":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/187381","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/comments?post=187381"}],"version-history":[{"count":0,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/187381\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/media?parent=187381"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/categories?post=187381"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/tags?post=187381"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}