Question

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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 3

1. determine the interest expense recorded in the adjusting entry at the end of year 1.

note: do not round intermediate calculations and round your final answer to nearest whole dollar. use 360 days a year.
year end accrual required for: fargo bank
interest to be accrued at year 1 principal × rate × time = interest

Explanation:

Step1: Identify principal, rate, time

Principal (P) = $33,000, Rate (R) = 8% = 0.08, Time (T): From November 28 to December 31. November has 30 days, so days in November: 30 - 28 = 2 days. December has 31 days. Total days = 2 + 31 = 33 days. Time = $\frac{33}{360}$ (since 360 days a year).

Step2: Calculate interest

Interest (I) = P × R × T = $33,000 × 0.08 × $\frac{33}{360}$
First, calculate 33,000 × 0.08 = 2,640
Then, 2,640 × $\frac{33}{360}$ = 2,640 × 33 ÷ 360
2,640 × 33 = 87,120
87,120 ÷ 360 = 242

Answer:

242