Question

On April 12, Hong Company agrees to accept a 60-day, 10%, $6,500 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? Help Save & Exit Multiple Choice Debit Notes Payable $6,500, credit Accounts Payable $6,500 Debit Cash $6,500credit Notes Payable $6,500. Debit Accounts Receivable $6,500, credit Notes Payable $6.500, Debit Accounts Payable $6.500, credit Notes Payable $6,500 Debit Sales $6,500: credit Notes Payable $6,500 < Prov 46 of 50 !!! Next >

Answer 1

Hong Company agrees to accept 60 days 10% $6500 note from Indigo company to extend the due date for accouts payable

Here Hong company is acceptor of note

For Indigo company, Hong Company is accounts payable party. by this transaction accounts payable is cancelled against notes payable.

So accounts payable Hong company is cancelled or debited and against this, notes payable will be credited by 6500 in books of Indigo company

So Journal entry in books of Indigo company

Debit Accounts payable..........6500

Credit notes payable............6500

Answer is D, Debit accounts payble by $6500 Credit notes payable by $6500

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