Parker Inc. is the payee of a $5,000, 90-day, 12% note written by Kent Inc. and due on September 1. On that date, Kent dishonors the note, and Parker believes there is no hope of eventual collection. Given this situation, what accounting entry should Parker make on September 1?

Credit Accounts ReceivableKent Industries $5,150; debit Notes Receivable $5,000; debit Interest Revenue $150

Debit Accounts ReceivableKent Industries $5,150; credit Notes Receivable $5,000; credit Interest Revenue $150

Debit Allowance for Doubtful Accounts $5,000; credit Notes Receivable $5,000

Credit Allowance for Doubtful Accounts $5,000; debit Notes Receivable $5,000

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