The entry in a firm's accounting records for a credit customer's check that was returned by the bank marked "NSF" would include

Question

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When a customer's check is returned "NSF" (non-sufficient funds), it means that there is not enough money in the customer's bank account to cover the payment. Therefore, the entry in the accounting records should reflect a reduction in Accounts Receivable (the amount owed by the customer) and a reduction in Cash (the payment that was not received). Therefore, the correct entry would be a debit to Accounts Receivable and a credit to Cash.

The Entry in a Firm's Accounting Records for a Credit