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On 18 October, Rough Co. asks Big Time Co to accept $650 cash and a 60-day, 15%, $5,000 note to replace an accounts payable of
On 18 October, Rough Co. asks Big Time Co to accept $650 cash and a 60-day, 15%, $5,000 note to replace an accounts payable of $5,650. 60 days later, Rough Co. honors the note. The correct journal entry from Rough Co's perspective would be a) Debit Notes Payable 5,000 and Credit Cash 5,000 b) Debit Notes Payable 5,000 and Debit Interest Expense 125; Credit Cash 5,125 c) Debit Accounts Payable 5000 and Debit Interest Expense 125; Credit Cash 5,125 d) Debit Notes Payable 5,125 and Credit Cash 5000 and Credit Interest Expense 125
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