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

question 22

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.