Required
Prepare entries to record the following transactions of Ibscon Company:
Mar. 1, Accepted a $50,000, 60-day, 4.5% note dated this day in granting Bolton Company a time extension on its past-due account.
23, Discounted, without recourse, the Bolton note at Security Bank at a cost of $100
June 21, Accepted a $22,000, 90-day, 5% note dated this day in granting Vince Soto a time extension on his past-due account.
July 5, Discounted, with recourse, the Soto note at Security Bank at a cost of $475.
Sept. 25, Received notice from Security Bank that the Soto note had been paid.
Analysis Component:
What reporting is necessary when a business discounts notes receivable with re-course and these notes have not reached maturity by the end of the fiscal period? Explain the reason for this requirement and what accounting principle is being satisfied.