DISCOUNTING NOTES RECEIVABLE. On February 1, Anderson, Inc., accepts an 8-month, $12,000, 11% note from a customer
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DISCOUNTING NOTES RECEIVABLE. On February 1, Anderson, Inc., accepts an 8-month, $12,000, 11% note from a customer in lieu of a $12,000 cash payment on an account receivable from the customer. Three months later, on May 1, Anderson discounts the note (with recourse) at its bank. The bank charges a discount rate of 13%.
REQUIRED:
1. Prepare the journal entry to record acceptance of the note on February 1.
2. Calculate the amount received from the bank on May 1.
3. Prepare the journal entry to record discounting the note with recourse.
4, What does the term with recourse mean in conjunction with the discounted note?
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