Question

A note receivable Mild Max Cycles discounted with recourse was dishonored on its maturity date. Mild Max would debit: A receivable. Dishonored note expense. A loss on dishonored receivable. Interest expense.

Answer 1

Answer:

A receivable.

Explanation:

Mild Max Cycles had a notes receivables, which it already discounted with some financial institution, which later on the maturity date stand to be dishonored.

It is clear that the company earlier already collected the money against it, but now as the note receivable was discounted with recourse that is it provided assurance to the financial institution, in case of any failure, thus, the company will pay back to the financial institution and that the company still have the right to receive it back from the note receivable.