The following information is extracted from Tara Corporations accounting records: May 1 Received a $6,000, 12%, 90-day


The following information is extracted from Tara Corporation’s accounting records:
May 1 Received a $6,000, 12%, 90-day note from V. Leigh, a customer.
6 Received a $9,000, 10%, 120-day note from C. Gable, a customer.
11 Sold the Leigh and Gable notes with recourse at the bank at 13%. In addition borrowed $10,000 from the bank for 90 days at 12%. The bank remits the face value less the interest. The estimated recourse liability for Leigh and Gable is $84 and $110, respectively.
July 31 The July bank statement indicated that the Leigh note had been paid.
Aug. 10 Repaid the $10,000 borrowed on May 11.
Sept. 4 Received notice that Gable had defaulted on the May 6 note. The bank charged a fee of $10. Paid the amount due on the Gable note to the bank. Informed Gable to pay Tara the entire amount due plus 11% interest on the total of the face amount of the note, the accrued interest, and the fee from the maturity date until Gable remits the amount owed.
23 Received the amount due from Gable.
Prepare journal entries to record the preceding information, assuming that Tara usually does not sell its notes. (Assume a 360-day year for the purposes of computing interest and round all calculations to the nearest penny.) Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...
Fantastic news! We've located the answer you've been seeking!

Step by Step Answer:

Related Book For  answer-question

Intermediate Accounting Reporting and Analysis

ISBN: 978-1285453828

2nd edition

Authors: James M. Wahlen, Jefferson P. Jones, Donald Pagach

Question Posted: