Question

On February 14, Watauga Enterprises received notice from the bank of a dishonored check from Wilkes Company in the amount of $200.00. The bank charged a service fee of $25.00. What is the correct journal entry for Watauga Enterprises to record the dishonored check?

A. Debit Accounts Receivable-Wilkes Company $200.00, debit Bank Service Charge $25.00; credit Cash$225.00B. Debit Accounts Receivable-Wilkes Company $225.00; credit Bank Service Charge $25.00, credit Cash$200.00C. Debit Accounts Receivable-Wilkes Company $225.00; credit Cash $225.00D. Debit Cash $225.00; credit Accounts Receivable-Wilkes Company $225.00

Answer 1

C. Debit Accounts Receivable-Wilkes Company $225.00; credit Cash $225.00

Step-by-step explanation:

The journal entry to record the dishonored check is presented below:

Account receivable A/c Dr - Wikes company $225

To Cash A/c $225

(Being the dishonored check is recorded)

To record this transaction we debited the account receivable and credited the cash account. The cash account includes both check amount and bank service fees