a companys own cash records show a balance of $3,200. after examining the bank statement, the following…

a companys own cash records show a balance of $3,200. after examining the bank statement, the following information is revealed: bank’s balance for cash $4,000 deposits outstanding $2,300 nsf check $600 checks outstanding $1,800 note collected by the bank $2,000 service fee charged by the bank $100 the entry to update the companys cash balance after the bank reconciliation is prepared would include a: multiple choice debit to accounts receivable credit to service revenue credit to service fee expense debit to notes receivable

a companys own cash records show a balance of $3,200. after examining the bank statement, the following information is revealed: bank’s balance for cash $4,000 deposits outstanding $2,300 nsf check $600 checks outstanding $1,800 note collected by the bank $2,000 service fee charged by the bank $100 the entry to update the companys cash balance after the bank reconciliation is prepared would include a: multiple choice debit to accounts receivable credit to service revenue credit to service fee expense debit to notes receivable

Answer

Explanation:

Step1: Identify transactions affecting company's cash balance

The NSF (non - sufficient funds) check and the service fee charged by the bank reduce the company's cash balance, and the note collected by the bank increases the company's cash balance.

Step2: Analyze each option

  • A debit to Accounts Receivable is not relevant as the transactions here are mainly about bank - related cash adjustments.
  • A credit to Service Revenue is incorrect as there is no revenue - related activity here.
  • A credit to Service Fee Expense is wrong because service fee is an expense that reduces cash, so it should be debited.
  • When the bank collects a note, the company's Notes Receivable is decreased (credited) and Cash is increased (debited). But we are looking at the overall impact on the cash balance adjustment entry. The note collection by the bank means the company's cash should increase. Also, the NSF check and service fee reduce cash. The net effect is that the company needs to adjust its cash balance based on these items. The NSF check of $600 and service fee of $100 are deductions from cash, and the note collected of $2000 is an addition. The company's cash balance needs to be adjusted for these items. The entry will involve debiting cash for the net increase (note collected minus NSF check and service fee: $2000 - $600 - $100=$1300). The note collection affects the Notes Receivable account. When the bank collects the note, the company's Notes Receivable is reduced. So, there will be a debit to Cash and a credit to Notes Receivable. In terms of the options given, a debit to Notes Receivable is part of the overall bank - reconciliation adjusting entry for the company's cash balance.

Answer:

Debit to Notes Receivable