Notification by the bank that a deposited customer check was returned NSF requires that the company make the following adjustment:

Question

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When a customer check is returned NSF (non-sufficient funds), it means that the amount of the check cannot be collected from the customer's bank account. Therefore, the company's bank account will be debited for the amount of the check, and the company needs to reverse the credit that was previously recorded when the check was deposited. This means that the company needs to increase its accounts receivable (since the customer still owes them the money) and decrease its cash (since the bank account was debited). Option A correctly reflects this adjustment.

Notification by the Bank That a Deposited Customer Check Was