Warner Co. entered into the following transactions involving short term liabilities in 2012 and 2013.
2012 Apr. 22 Purchased $ 5,000 of merchandise on credit from Fox Products, terms are 1/10, n/30. Warner uses the perpetual inventory system.
May 23 Replaced the April 22 account payable to Fox Products with a 60 day, $ 4,600 note bearing 15% annual interest along with paying $ 400 in cash.
July 15 Borrowed $ 12,000 cash from Spring Bank by signing a 120 day, 10% interest bearing note with a face value of $ 12,000.
___?___ Paid the amount due on the note to Fox Products at maturity.
___?___ Paid the amount due on the note to Spring Bank at maturity.
Dec. 6 Borrowed $ 8,000 cash from City Bank by signing a 45 day, 9% interest bearing note with a face value of $ 8,000. 31 Recorded an adjusting entry for accrued interest on the note to City Bank. 2013
___?___ Paid the amount due on the note to City Bank at maturity.
Required:
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 2012.
4. Determine the interest expense to be recorded in 2013.
5. Prepare journal entries for all the preceding transactions and events for years 2012 and 2013.