When preparing the monthly bank reconciliation,the accountant for Tiffany Toys noted that a cheque received from a customer last month for $89 was marked NSF and returned along with the bank statement.In reconciling the bank balance with the company's cash account,how should the $89 be recorded?

Question

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The cheque was marked NSF (non-sufficient funds), which means the customer's account did not have enough funds to cover the payment. Therefore, the cheque should not be included in the company's cash balance. The accountant should deduct the $89 from the company's cash balance in the reconciliation process.

When Preparing the Monthly Bank Reconciliation,the Accountant for Tiffany Toys