Provide the journal entries for 2013 to record the receipt

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Tortuga Enterprises loaned $350,000 to Turner Inc. on January 1, 2010. The terms of the loan require principal payments of $70,000 each year for five years plus interest at the market rate of interest of 6%. The first principal and interest payment is due on January 1, 2011. Turner made the required payments during 2011 and 2012. However, during 2012 Turner began to experience financial difficulties, requiring Tortuga to reassess the collectibility of the loan. On December 31, 2012, Tortuga determines that the remaining principal payments will be collected, but the collection of interest is unlikely.

1. Compute the present value of the expected future cash flows as of December 31, 2012.

2. Provide the journal entry to record the loan impairment as of December 31, 2012.

3. Provide the journal entries for 2013 to record the receipt of the principal payment on January 1 and the recognition of interest revenue as of December 31, assuming that Tortuga's assessment of the collectibility of the loan has not changed.

Reference no: EM13499074

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