Priscilla's Exotic Pets discounted a note receivable without recourse and the sales criteria were met. The discounting is recorded as:

Question

Quizplus · Accepted Answer

When a note receivable is discounted without recourse and the sales criteria are met, it is considered a sale, and the transaction should be recorded as such. This means that the note receivable and any related interest income should be removed from the books, and cash and a loss on the sale should be recorded. Therefore, option C is the best choice. Option A is not correct as there is no security involved in the transaction, and option B is not correct as note disclosure is not sufficient to account for the transaction. Option D is not correct as a transaction has occurred and must be recorded accordingly.

Priscilla's Exotic Pets Discounted a Note Receivable Without Recourse and the Sales