accounting dishonor of notes receivable question

Dishonor of Notes Receivable: A dishonored (defaulted) note is a note that is not paid in full at maturity. The payee still has a claim against the maker of the note for both the note and the interest. Therefore, the note holder usually transfers the Notes Receivable account to an Accounts Receivable account. Example: On February 1". Higley Co. indicates that it cannot pay at the present time. The entry to record the dishonor of the note depends on whether Wolder Co. expects eventual collection. If so, the entry would be: If there is no hope of collection, the note holder would write off the face value of the note by debiting Allowance for Doubtful Accounts