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The following information is extracted from Tara Corporations accounting records: May 1 Received a $6,000, 12%, 90-day note from V. Leigh, a customer. 6 Received
The following information is extracted from Tara Corporations 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. |
Required:
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.)
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