Valley Spa purchased $9400 in plumbing components from Tubman Co. Valley Spa signed a 60-day, 12% promissory note for $9400. If the note is dishonored, but Tubman intends to continue collection efforts, what is the journal entry to record the dishonored note? (Use 360 days a year.)
A. Debit Bad Debt Expense $9588; credit Accounts Receivable $9588.
B. Debit Bad Debt Expense $9400; credit Notes Receivable $9400.
C. Debit Accounts Receivable-Valley Spa $9588, credit Interest Revenue $188; credit Notes Receivable $9400.
D. Debit Accounts Receivable-Valley Spa $9400; credit Notes Receivable $9400.
E. Debit Accounts Receivable $9588; debit Bad Debt Expense $188; credit Notes Receivable $9400.
Answer: C
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