Notification by the bank that a deposited customer check was returned NSF requires that the company make the following adjusting entry:
A) Accounts Receivable Cash
B) Cash Accounts Receivable
C) Miscellaneous Expense Accounts Receivable
D) No adjusting entry is necessary.

Question

Quizplus · Accepted Answer

The bank notification indicates that the check has been returned and thus the company's cash account must be reduced to reflect the fact that the funds were not received. At the same time, the customer who issued the check still owes the company the amount of the check. Therefore, an adjusting entry must be made to debit Accounts Receivable and credit Cash.

Notification by the Bank That a Deposited Customer Check Was