Valley Spa Purchased $7,800 in Plumbing Components from Tubman Co

Multiple Choice

Valley Spa purchased $7,800 in plumbing components from Tubman Co. Valley Spa signed a 60- day, 10% promissory note for $7,800. 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 $7,930; credit Accounts Receivable $7,930.
B) Debit Accounts Receivable-Valley Spa $7,800; credit Notes Receivable $7,800.
C) Debit Accounts Receivable $7,930; debit Bad Debt Expense $130; credit Notes Receivable $8,060.
D) Debit Accounts Receivable-Valley Spa $7,930, credit Interest Revenue $130; credit Notes Receivable $7,800.
E) Debit Bad Debt Expense $7,800; credit Notes Receivable $7,800.