On April 12, Hong Company agrees to accept a 60-day, 10%, $4,500 note from Indigo Company to extend the due date on an overdue accounts payable. What is the journal entry needed to record the transaction by Indigo Company?
A. Debit Sales $4,500; credit Notes Payable $4,500.
B. Debit Accounts Payable $4,500; credit Notes Payable $4,500.
C. Debit Cash $4,500; credit Notes Payable $4,500.
D. Debit Notes Payable $4,500; credit Accounts Payable $4,500.
E. Debit Accounts Receivable $4,500; credit Notes Payable $4,500.
Answer: B
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