Novak Industries Had a Check Returned to It Labeled "NSF $\begin{array}{lcc}\text { Accounts receivable } & 200 \\\quad\text { Service charges } & &200 \\\end{array}$

question 16

Multiple Choice

Novak Industries had a check returned to it labeled "NSF." What journal entry should Novak Industries make to recognize the $200 NSF check?

• A) \(\begin{array}{lcc}
• \text { Accounts receivable } & 200 \\
• \quad\text { Service charges } & &200 \\
• \end{array}\)
• B)\(\begin{array}{lccc}
• \text { Bad debt expense } & 200 & \\
• \quad \text { Accounts receivable } && 200 \\
• \end{array}\)
• C)\(\begin{array}{lccc}
• \text { Accounts receivable } & 200\\
• \quad\text { Bad debt expense }& &200 \\
• \end{array}\)
• D)\(\begin{array}{lccc}
• \text { Allowance for uncollectible accounts } & 200 \\
• \quad\text { Accounts receivable } & &200\\
• \end{array}\)
• E) \(\begin{array}{lccc}
• \text { Accounts receivable } & 200 \\
• \quad\text { Cash }& &200\\
• \end{array}\)

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Definitions:

Transaction Recorded Twice

This refers to a bookkeeping error where a financial transaction is mistakenly entered into an accounting system more than once, potentially distorting financial statements.

Liabilities

Debts or financial responsibilities that a company has towards others, requiring settlement via the transfer of economic resources over a period.

Debits

Entries in accounting that represent an increase in assets or expenses, or a decrease in liabilities, equity, or income.

Credits

Accounting entries that increase liabilities or equity or decrease assets or expenses.