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question on april 12 hong company agrees to accept a 60 day 10 7 500note from indigo 4293351

Question

On April 12, Hong Company agrees to accept a 60-day, 10%, $7,500note from Indigo Company to extend the due date on an overdueaccount. What is the journal entry needed to record the payment ofthe note by Indigo Company on the maturity date? (Use 360days a year.)

A.) Debit Cash $7,625; credit Interest Revenue $125; creditNotes Payable $7,500.

B.) Debit Notes Payable $7,500; debit Interest Expense $188;credit Cash $7,688.

C.) Debit Notes Payable $7,500; credit Interest Expense $125,credit Cash $7,375.

D.) Debit Notes Payable $7,500; debit Interest Expense $125;credit Cash $7,625.

E.) Debit Cash $7,625; credit Interest Revenue $125; creditNotes Receivable $7,500.

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