When a customer's NSF check is returned to a business with its bank statement, the business should make a journal entry increasing

Question

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When a customer's NSF (non-sufficient funds) check is returned, it means the business did not receive the promised payment. Thus, the amount of the NSF check needs to be added back to the business's accounts receivable balance, since the customer still owes that money. There is no increase to cash or a net loss, and an expense for bad debts would be recorded later if the business determines it cannot collect on the outstanding balance.

When a Customer's NSF Check Is Returned to a Business