8-72

Problem 8-72 Recording Entries for the Discounting of a On May 1, 2020, Mark Company sold merchandise to Customer Kim for $40,000, credit terms 2/10, n/30. At the end of May, Customer Kim could not make payment. Instead, asix month 12% note receivable of$40,000 was tereceived by Mark (dated June 1, 2020). Mark Company's accounting period ends December 31. On August 1, 2020, Mark discounted (sold) this note, with recourse, to City Bank at 14% interest. On the maturity date, Cus- tomer Kim paid the bank in full for the note. Re e able L06 Required a. Prepare the required entry(ies) for Mark Company on May 1,2020 (ignoring cost of goods sold). b. Prepare the required entries for Mark Company on June 1, 2020, and August 1, 2020. c. Assume instead that Mark sold the accounts receivable (without recourse) to a factor on May 2, 2020. The factor charges 8% as a finance fee and withholds 10% of the receivables for sales returns, allowances, and discounts. Prepare Mark's entry on May 2, 2020