Wyatt Corporation, an 80%-owned subsidiary, accepted a $60,000, 12%, 90-day note from a customer for services performed. On that same date, because Wyatt Corporation was in need of cash for operations, the subsidiary endorsed the note over to its parent company in exchange for $60,000. After holding the note for 30 days, the parent discounted the note with an independent bank. The discount rate was 13%. Both companies record discounted notes in a Discounted Notes Receivable account.

A. Compute the proceeds received by the parent company from discounting the note.
B. Prepare the workpaper entry, if any, needed to eliminate the note. If none is needed, explain why.

  • CreatedMarch 13, 2015
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