In preparing the monthly bank reconciliation,Fur Ltd ascertains that there is a $750 cheque from Hunt Traders for merchandise that is marked NSF.The journal entry to record this in Fur Ltd's books is:

Question

Quizplus · Accepted Answer

The cheque from Hunt Traders bounced, so it should be recorded as a return of funds from Accounts receivable to Cash. Therefore, the correct journal entry is to debit Accounts receivable for $750 and credit Cash for $750. Option A fits this description. Option B is incorrect as it records the return of funds to Inventory, which is not appropriate. Option C is incorrect because the return of funds is to Accounts receivable, not Accounts payable. Option D is also incorrect as it records the return of funds to Accounts receivable instead of reducing the amount owed by debiting it.

In Preparing the Monthly Bank Reconciliation,Fur Ltd Ascertains That There \quad

In Preparing the Monthly Bank Reconciliation,Fur Ltd Ascertains That There $\quad$