While preparing its bank reconciliation, Mayhew Company determined that its bank had collected a $950 account receivable for the company and deducted a $35 collection fee. Which of the following shows the effect of this transaction on the financial statements?
A)Option A
B)Option B
C)Option C
D)Option D

Question

While preparing its bank reconciliation, Mayhew Company determined that its bank had collected a $950 account receivable for the company and deducted a $35 collection fee. Which of the following shows the effect of this transaction on the financial statements? 
A)Option A 
B)Option B 
C)Option C 
D)Option D

Quizplus · Accepted Answer

The entry to record receipt of the receivable, less the bank's collection fee, increases cash (an asset) by $915, decreases accounts receivable (an asset) by $950, and increases miscellaneous expenses by $35, which decreases net income and equity. It is reported as a cash inflow for operating activities.

While Preparing Its Bank Reconciliation, Mayhew Company Determined That Its