Accompanying the bank statement was a credit memorandum for a short-term note collected by the bank for the customer.What adjustment is required in the depositor's accounts?

Question

Quizplus · Accepted Answer

The customer received cash from the bank for the note collected, hence Cash account needs to be increased. At the same time, the customer needs to reduce the balance of the Notes Receivable account as it has been collected by the bank. Therefore, the correct adjustment required in the depositor's accounts is to increase Cash and decrease Notes Receivable. Option A is incorrect because it suggests increasing Notes Receivable instead of decreasing it. Option B is also incorrect because the note collected is not part of Miscellaneous Income. Option D is irrelevant because it suggests increasing Accounts Receivable instead of decreasing Notes Receivable.

Accompanying the Bank Statement Was a Credit Memorandum for a Short-Term