Valley Spa purchased $9,400 in plumbing components from Tubman Co. Valley Spa signed a 60-day, 12% promissory note for $9,400. 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.)

Multiple Choice

• Debit Accounts ReceivableValley Spa $9,400; credit Notes Receivable $9,400.

• Debit Bad Debt Expense $9,588; credit Accounts Receivable $9,588.

• Debit Bad Debt Expense $9,400; credit Notes Receivable $9,400.

• Debit Accounts Receivable $9,588; debit Bad Debt Expense $188; credit Notes Receivable $9,400.

• Debit Accounts ReceivableValley Spa $9,588, credit Interest Revenue $188; credit Notes Receivable $9,400.