Han$$s Supplies$$s bank statement contained a $$270$ NSF check that one of its customers had written to pay for supplies purchased.

Required:

Show the effects of recognizing the NSF check on the financial statements by recording the appropriate amounts in a horizontal financial statements model. Also, in the Statement of Cash Flows column, classify the cash flows as operating activities $($OA$),$ investing activities $($IA$),$ or financing activities $($FA$).$

Suppose the customer redeems the check by giving Han $$290$ cash in exchange for the bad check.

The additional $$20$ paid a service fee charged by Han. Show the effects on the financial statements.

Is the recognition of the NSF check on Han$$s books an asset source, use, or exchange transaction?

Select which of the following is the correct answer.