Valley Spa purchased $11,700 in plumbing components from Tubman Co. Valley Spa Studios signed a 60-day, 10% promissory note for $11,700. If the note is dishonored, what is the journal entry to record the dishonored note? (Use 360 days a year.)

A) Debit Bad Debt Expense $11,700; credit Notes Receivable $11,700.

B) Debit Accounts Receivable—Valley Spa $11,895, credit Interest Revenue $195; credit Notes Receivable $11,700.

C) Debit Accounts Receivable $11,700; debit Bad Debt Expense $195; credit Notes Receivable $11,895.

D) Debit Accounts Receivable—Valley Spa $11,700; credit Notes Receivable $11,700.

E) Debit Bad Debt Expense $11,895; credit Accounts Receivable $11,895.