Tyrell Co. entered into the following transactions involving short-term liabilities in 2014 and 2015. 2014 Apr. 20 Purchased $36,500 of merchandise on credit from Locust, terms are 1/10, n/30. Tyrell uses the perpetual inventory system. May 19 Replaced the April 20 account payable to Locust with a 90-day, $35,000 note bearing 8% annual interest along with paying $1,500 in cash. July 8 Borrowed $51,000 cash from National Bank by signing a 120-day, 12% interest-bearing note with a face value of $51,000. __?__ Paid the amount due on the note to Locust at the maturity date. __?__ Paid the amount due on the note to National Bank at the maturity date. Nov. 28 Borrowed $27,000 cash from Fargo Bank by signing a 60-day, 6% interest-bearing note with a face value of $27,000. Dec. 31 Recorded an adjusting entry for accrued interest on the note to Fargo Bank. 2015 __?__ Paid the amount due on the note to Fargo Bank at the maturity date.
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
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Tyrell Co. entered into the following transactions involving short-term liabilities in 2014 and 2015. |
| 2014 | |
| Apr. 20 |
Purchased $36,500 of merchandise on credit from Locust, terms are 1/10, n/30. Tyrell uses the perpetual inventory system. |
| May 19 |
Replaced the April 20 account payable to Locust with a 90-day, $35,000 note bearing 8% annual interest along with paying $1,500 in cash. |
| July 8 |
Borrowed $51,000 cash from National Bank by signing a 120-day, 12% interest-bearing note with a face value of $51,000. |
| __?__ | Paid the amount due on the note to Locust at the maturity date. |
| __?__ | Paid the amount due on the note to National Bank at the maturity date. |
| Nov. 28 |
Borrowed $27,000 cash from Fargo Bank by signing a 60-day, 6% interest-bearing note with a face value of $27,000. |
| Dec. 31 | Recorded an |
| 2015 |
| __?__ | Paid the amount due on the note to Fargo Bank at the maturity date. |
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