On April 12, Hong Company agrees to accept a 60-day, 10%, $5,900 note from Indig

Question

On April 12, Hong Company agrees to accept a 60-day, 10%, $5,900 note from Indigo Company to extend the due date on an overdue account. What is the journal entry needed to record the transaction by Indigo Company?

A.) Debit Accounts Payable $5,900; credit Notes Payable $5,900.

B.) Debit Notes Payable $5,900; credit Accounts Payable $5,900.

C.) Debit Accounts Receivable $5,900; credit Notes Payable $5,900.

D.) Debit Sales $5,900; credit Notes Payable $5,900.

E.) Debit Cash $5,900; credit Notes Payable $5,900.

On April 12, Hong Company agrees to accept a 60-day, 10%, $5,900 note from Indigo Company to extend the due date on an overdue account. What is the journal entry needed to record the transaction by Indigo Company?

Explanation / Answer

B.) Debit Notes Payable $5,900; credit Accounts Payable $5,900.

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