Jeff Company issues a promissory note to David Company to get extended time on an account payable. Jeff Company records this transaction as follows:
A) debit Accounts Receivable; credit Notes Receivable.
B) debit Notes Receivable; credit Accounts Receivable.
C) debit Notes Payable; credit Accounts Payable.
D) debit Accounts Payable; credit Notes Payable.

Question

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Jeff Company is converting an account payable into a note payable, so they debit Accounts Payable to decrease it and credit Notes Payable to record the new obligation.

Jeff Company Issues a Promissory Note to David Company to Get