Problem - Bergen Co. entered into the following transactions involving short-term liabilities in 2010 and 2011.
2010
Apr. 22 Purchased $4,000 of merchandise on credit from Quinn Products, terms are 1/10, n/30. Bergen uses the perpetual inventory system.
May 23 Replaced the April 22 account payable to Quinn Products with a 60-day, $3,600 note bearing 15% annual interest along with paying $400 in cash.
July 15 Borrowed $9,000 cash from Blackhawk Bank by signing a 120-day, 10% interest-bearing note with a face value of $9,000.
____ Paid the amount due on the note to Quinn Products at maturity.
____ Paid the amount due on the note to Blackhawk Bank at maturity.
Dec. 6 Burrowed $16,000 cash from City Bank by signing a 45-day, 9% interest-bearing note with a face value of $16,000.
Dec. 31 Recorded an adjusted entry for accrued interest on the note to City Bank.
2011
____ Paid the amount due on the note to City Bank at maturity.
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 to be recorded in the adjusting entry at the end of 2010.
4) Determine the interest expense to be recorded in 2011.
5) Prepare journal entries for all the preceding transactions and events for years 2010 and 2011.