A bank statement included a NSF check from customer Kim Fields for $2,100.The journal entry to record this reconciling item should:
A)debit NSF and credit Cash for $2,100.
B)debit Cash and credit Accounts Receivable for $2,100.
C)debit Accounts Receivable and credit Cash for $2,100.
D)debit Cash and credit NSF for $2,100.

Question

Quizplus · Accepted Answer

The NSF check means that the customer's check bounced or was returned due to insufficient funds, meaning that the bank did not receive the $2,100 that was expected. Therefore, the company's accounts receivable account should be debited to show that they have not received this payment, and the company's cash account should be credited to reflect the decrease. In this case, the journal entry should be: debit Accounts Receivable for $2,100 and credit Cash for $2,100.

A Bank Statement Included a NSF Check from Customer Kim