The bank statement of Hibbert Supplies included a 300 NSF
The bank statement of Hibbert Supplies included a $300 NSF check that one of Hibbert’s customers had written to pay for services that were provided by Hibbert.
Required
a. Show the effects of recognizing the NSF check on the financial statements by recording the appropriate amounts in a horizontal statements model like the following one:
b. Is the recognition of the NSF check on Hibbert’s books an asset source, use, or exchange transaction?
c. Suppose the customer redeems the check by giving Hibbert $325 cash in e x change for the bad check. The additional $25 paid a service fee charged by Hibbert. Show the effects on the financial statements in the horizontal statements model in Requirement a.
d. Is the receipt of cash referred to in Requirement c an asset source, use, or exchange transaction?
e. Record in general journal form the adjusting entry for the NSF check and the subsequent entry for redemption of the check by the customer.
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