While performing the monthly bank reconciliation,the bookkeeper for Avon Company made the journal entry for a bank service charge of $20.Which of the following correctly shows the effect of the entry on the financial statements?

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

Question

While performing the monthly bank reconciliation,the bookkeeper for Avon Company made the journal entry for a bank service charge of $20.Which of the following correctly shows the effect of the entry on the financial statements?

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

Quizplus · Accepted Answer

The entry to record the service charge will decrease assets (cash)and stockholders' equity (retained earnings).It increases expenses,which decreases net income.It is reported as a cash outflow for operating activities on the statement of cash flows.

While Performing the Monthly Bank Reconciliation,the Bookkeeper for Avon Company