In May, farmer Smith sold one of his tractors to farmer Jones for $26,000. Smith received $6,000 down and a 7% note payable (for $20,000) to be paid on October 15th. In need of cash, farmer Smith brought the note to his bank for discounting. The bank gave cash less 5% for the note, whereas farmer Smith endorsed the note in favour of the bank. Farmer Smith performed an act of

Question

Quizplus · Accepted Answer

Farmer Smith performed an act of guarantee by endorsing the note in favor of the bank, which means he is guaranteeing the payment of the note.

In May, Farmer Smith Sold One of His Tractors to Farmer