While preparing its bank reconciliation,Maynard Company determined that its bank had collected a $650 account receivable for the company and deducted a $25 collection fee.Which of the following shows the effect of this transaction on the financial statements?

Question

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Recording the receipt of the receivable, less the bank's collection fee, increases assets (cash) by $625 and decreases assets (accounts receivable) by $650; thus, total assets decrease by $25. stockholders' equity (retained earnings) decreases by the same amount. The transaction increases expenses by $25, which decreases net income. The net cash received of $625 is reported as a cash inflow for operating activities.

While Preparing Its Bank Reconciliation,Maynard Company Determined That Its Bank