On April 12, Hong Company agrees to accept a 60-day, 10%, $6,100 note from Indigo Company to extend the due date on an overdue account. What is the journal entry needed to record the transaction by Indigo Company?

Since Notes payable is $6,100

The interest would be = $6,100 * 10% * 60: 360

= $101.67

Total of interest + notes payable = $6100 + $101.67

= $6201.67

So, the journal entry would be

Notes payable A/c Dr $6,100

Interest Expense A/c Dr $101.67

To Cash A/c $6201.67

(Being notes payable is accepted)

Since, notes is issued and interest is charged so both accounts is debit and cash is gone so it would be credited.