A Day Spa Accepted a Check from a Customer as Payment

question 197

Multiple Choice

A Day Spa accepted a check from a customer as payment for services. Unfortunately, the customer's check bounced. The journal entry required on the company's books as a result of this bank reconciliation item will

• A)decrease total assets.
• B)decrease stockholders' equity.
• C)Both a and
• D)have no net impact on total assets.

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Definitions:

Reissued

When a previously issued stock or bond is sold again by the corporation, often after being bought back from the market.

Paid-In Capital

The total amount of money shareholders have invested in a company in exchange for equity, including shares at par value and additional paid-in capital.

Treasury Stock

Treasury stock refers to shares that were issued and subsequently reacquired by the issuing company, reducing the amount of outstanding stock on the open market.

Reissuance

The process of re-releasing previously issued shares back into the market, often after they've been bought back by the company.