The journal entry to record an NSF cheque from a customer would require a:
A)debit to Accounts Payable and a credit to Cash.
B)debit to Cash and a credit to Accounts Receivable.
C)debit to Accounts Receivable and a credit to Cash.
D)debit to Miscellaneous Expense and a credit to Cash.

Question

Quizplus · Accepted Answer

When a customer's cheque is returned due to insufficient funds (NSF), the company must reverse the initial entry that increased cash and decreased accounts receivable. Therefore, the company debits Accounts Receivable to increase it back and credits Cash to decrease it, reflecting the cheque's return.

The Journal Entry to Record an NSF Cheque from a Customer