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

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When a credit customer's check is returned by the bank marked "NSF" (non-sufficient funds), it means that there is not enough money in the customer's account to cover the payment. As a result, the firm would need to debit its Accounts Receivable account to reverse the credit entry made when the customer initially paid the invoice. At the same time, the firm should credit its Cash account to reduce the balance accordingly. This is because the firm has not received the payment in full, and the amount owed by the customer remains outstanding. There is no need to involve Accounts Payable or Miscellaneous Expense accounts in this transaction.

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