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worthy, petitioner would issue a check to the dealership
for the purchase price of the car, and the customer would
issue a promissory note to petitioner under which the
customer would agree to pay the principal amount of the
note plus interest. Payment of the customer's promissory
note was secured by a mortgage on the automobile that was
being financed.
Petitioner's employees maintained a ledger card for
every lending transaction. Each ledger card contained the
customer's name, the vehicle identification number of the
automobile that was being financed, the principal amount of
the loan, and the total interest that would accrue during
the life of the loan. During the life of the loan,
petitioner's employees would record the date and amount of
each payment on the appropriate ledger card. Petitioner
did not maintain a list of all loans outstanding, and
there was no way of knowing if a ledger card was lost or
misplaced, unless the borrower subsequently made a payment
on the loan.
Since its inception as a finance company in 1964,
through and including the year in issue, petitioner has
used the same method of accounting to record loan
transactions on its books and records. At the time
petitioner made a loan, petitioner's employees debited
petitioner's "Loan Receivable" account in an amount equal
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