Reference no: EM132882112

Problem - Notes Receivable Transactions - The following notes receivable transactions occurred for Harris Company during the last three months of the current year. (Assume all notes are dated the day the transaction occurred.)

Oct. 9 Received a $5,000, 12%, 60-day note from K. Weedon, a customer.

Oct. 12 Received a $6,000, 10%, 90-day note from M. Black, a customer.

Oct. 15 Sold the Weedon note with recourse at the bank at 14%. The fair value of the recourse liability is estimated to be $1,230.

Nov. 11 Sold the Black note with recourse at the bank at 15%. The fair value of the recourse liability is estimated to be $850.

Nov. 16 Received an $8,000, 12%, 60-day note from B. Butcher, a customer.

Nov. 20 Received a $6,000, 11%, 120-day note from D. Goldman, a customer.

Dec. 1 Received a $9,000, 13%, 60-day note from S. Lambert, a customer.

Dec. 8 Received notice that the Weedon note was paid at maturity.

Dec. 10 Sold the Goldman note without recourse at the bank at 13%.

Required -

1. Prepare the journal entries to record the preceding note transactions and the necessary adjusting entries on December 31. (Assume that Harris does not normally sell its notes and uses a 360-day year for the purpose of computing interest. Round all calculations to the nearest penny.)

2. Show how Harris' notes receivable would be disclosed on the December 31 balance sheet. (Assume these are the only note transactions encountered by Harris during the year.)