A Cheque in the Amount of $425 Was Returned by the Bank

question 4

Multiple Choice

A cheque in the amount of $425 was returned by the bank marked "NSF".A bank service fee of $20 was charged for processing the returned cheque.Upon notification of the NSF, the company who initially received the customer's cheque will most likely

• A)reverse the customer's payment on their books to re-establish the accounts receivable for $425.
• B)make no changes to the accounting records but advise the customer that the payment was declined and is still outstanding.
• C)reverse the customer's payment on their books to re-establish the accounts receivable for $425 and debit bank charges expense for the bank service fee of $20.
• D)reverse the customer's payment on their books to re-establish the accounts receivable for $425 and debit the accounts receivable for the bank service fee of $20.

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Definitions:

Independently Owned

Refers to businesses or properties that are owned and operated by individuals or entities, not part of larger corporate groups or franchises.

Full-Line Wholesalers

Businesses that provide a complete range of goods within a specific sector.

Channel Functions

The roles and activities performed by intermediaries within a distribution channel to move products from producers to consumers.

Rack Jobbers

Distributors who place products in stores on consignment and retain ownership of the products while managing inventory and setup.