Ace Co. makes a loan to Tresh Inc. and receives in exchange a three-year, $20,000 note bearing interest at 10 percent annually. The market rate of interest for a note of similar risk is 12 percent. Which journal entry is correct to record the receipt of the note?

Group of answer choices

Debit cash 20,000

Credit Discount on notes receivable 4,804

Debit notes receivable 20,000

Credit Cash 14,236