Answer
Rolen should decrease cash, increase notes (accounts) receivable past due for all payments caused by the dishonor and eliminate the recourse liability.
Work Step by Step
The note (account) receivable should be written down to its projected recoverable amount (or an allowance for noncollectable established), and a loss on noncollectable notes should be recorded for the excess of this difference over the amount of the recourse obligation previously recorded.
