If a note receivable is discounted with recourse and the customer defaults at final payment,the seller

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If a note receivable is discounted with recourse, the seller is responsible for any default by the customer. Therefore, in case of default, the seller must repay the full amount of the note plus interest to the bank. This is because the bank has already advanced the funds to the seller based on the assumption that the seller will be able to collect the full amount from the customer. If the customer defaults, the bank will turn to the seller to recover the funds, and the seller will have to repay the bank to satisfy the obligation.

If a Note Receivable Is Discounted with Recourse and the Customer