Included in the bank statement was a debit for an NSF (not sufficient funds) payment received from a customer. What entry is required in the company's accounts?
A) DR Other revenue
CR Cash
B) DR Cash
CR Other revenue
C) DR Cash
CR Accounts receivable
D) DR Accounts receivable
CR Cash

Question

Quizplus · Accepted Answer

The company's accounts need to reflect that they have not received the payment from the customer and that their own bank account was debited. Therefore, the best choice is to record a debit to accounts receivable (to reduce the balance due from the customer) and a credit to cash (to reflect the amount that was withdrawn from the bank account).

Included in the Bank Statement Was a Debit for an NSF