Intercompany note discounted. Assume the same facts as in Exercise 11, but in addition, assume that Saratoga is itself in need of cash. It discounts the note received from Windsor at First Bank on...

Intercompany note discounted. Assume the same facts as in Exercise 11, but in addition, assume that Saratoga is itself in need of cash. It discounts the note received from Windsor at First Bank on July 1, 2017, at a discount rate of 8% per annum.

1. Prepare the entries that both companies would have made on their separate books, including interest accruals.

2. Prepare the eliminations, in entry form, that will be made on a consolidated worksheet prepared as of December 31, 2017.