Notification by the bank that a customer's deposited cheque was returned NSF requires that the company make the following adjusting journal entry:
D)No adjusting entry required.

Question

Quizplus · Accepted Answer

When a customer's deposited cheque is returned NSF (not sufficient funds), the company needs to reverse the original entry made when the cheque was received. This means that the company needs to reduce both the cash account (to reflect the cheque not being honored) and the accounts receivable account (to reflect that the customer didn't actually pay). Therefore, the adjusting journal entry required would be to debit accounts receivable and credit cash.

Notification by the Bank That a Customer's Deposited Cheque Was