Question

required information
problem 9-1a (algo) short-term notes payable transactions and entries lo p1
the following information applies to the questions displayed below.
tyrell company entered into the following transactions involving short-term liabilities.
year 1
april 20 purchased $39,500 of merchandise on credit from locust, terms n/30.
may 19 replaced the april 20 account payable to locust with a 90-day, 8%, $35,000 note payable along with paying $4,500 in cash.
july 8 borrowed $54,000 cash from nbr bank by signing a 120-day, 11%, $54,000 note payable.
? paid the amount due on the note to locust at the maturity date.
? paid the amount due on the note to nbr bank at the maturity date.
november 28 borrowed $33,000 cash from fargo bank by signing a 60-day, 8%, $33,000 note payable.
december 31 recorded an adjusting entry for accrued interest on the note to fargo bank.
year 2
? paid the amount due on the note to fargo bank at the maturity date.
problem 9-1a (algo) part 2

1. determine the interest due at maturity for each of the three notes.

note: do not round intermediate calculations and round your final answer to nearest whole dollar. use 360 days a year.

	principal	×	rate	×	time	=	interest
locust		×	%	×		=
nbr bank		×	%	×		=
fargo bank		×	%	×		=

Explanation:

Step 1: Interest for Locust Note

The formula for simple interest is $I = P \times r \times t$, where $P$ is principal, $r$ is annual interest rate (in decimal), and $t$ is time in years. For Locust: $P = 35000$, $r = 0.08$, $t = \frac{90}{360}$.
$I = 35000 \times 0.08 \times \frac{90}{360}$
$= 35000 \times 0.08 \times 0.25$
$= 35000 \times 0.02$
$= 700$

Step 2: Interest for NBR Bank Note

For NBR Bank: $P = 54000$, $r = 0.11$, $t = \frac{120}{360}$.
$I = 54000 \times 0.11 \times \frac{120}{360}$
$= 54000 \times 0.11 \times \frac{1}{3}$
$= 54000 \times \frac{0.11}{3}$
$= 18000 \times 0.11$
$= 1980$

Step 3: Interest for Fargo Bank Note

For Fargo Bank: $P = 33000$, $r = 0.08$, $t = \frac{60}{360}$.
$I = 33000 \times 0.08 \times \frac{60}{360}$
$= 33000 \times 0.08 \times \frac{1}{6}$
$= 33000 \times \frac{0.08}{6}$
$= 5500 \times 0.08$
$= 440$

Answer:

• Locust: $\boldsymbol{700}$
• NBR Bank: $\boldsymbol{1980}$
• Fargo Bank: $\boldsymbol{440}$

(In table form as per the problem's requirement, filling the values:

	Principal	×	Rate (%)	×	Time	=	Interest
NBR Bank	54000	×	11	×	120/360	=	1980
Fargo Bank	33000	×	8	×	60/360	=	440	)