2. On February 28, 2005, Pylon Corporation discounted at Bank of Los Angeles at a 15%

discount rate a $120,000, 60-day, 12% note receivable dated February 19, 2005, made by Sullivan Company, a wholly owned subsidiary of Pylon. In its journal entry to record the discounting of the note, Pylon:

a. Debits Cash, $119,799 ($122,400 $2,601).

b. Credits Discount on Intercompany Notes Receivable, $2,601 ($122,400 0.15 51⁄360).

c. Credits Intercompany Interest Revenue, $2,400 ($120,000 0.12 60⁄360).

d. Credits Notes Receivable, $120,000.

e. Prepares none of the foregoing debits or credits.