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?
A) Option A
B) Option B
C) Option C
D) Option D

Question

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? 
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 $625, decreases accounts receivable (an asset) by $650, and increases miscellaneous expenses by $25, which decreases net income and equity. It is reported as a cash inflow for operating activities.

While Preparing Its Bank Reconciliation, Maynard Company Determined That Its