Notification by the bank that a customer's deposited cheque was returned NSF requires that the company make the following adjusting journal entry:

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When a cheque is returned NSF (Non-Sufficient Funds), it means the cheque cannot be cashed due to insufficient funds in the issuer's account. The company needs to reverse the initial entry made when the cheque was deposited. Initially, the company would have debited cash and credited accounts receivable to record the receipt of the cheque. When the cheque bounces, the company must reverse this by debiting accounts receivable (to show that the customer still owes the money) and crediting cash (to reflect the reduction in the company's bank balance).

Notification by the Bank That a Customer's Deposited Cheque Was