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What is the preferred method of dealing with "bounced checks" when the original transaction...

Question:

What is the preferred method of dealing with "bounced checks" when the original transaction included sales tax?

a. Generate a statement for the customer.

b. Invoice the customer for the purchase again.

c. Enter a bill for the customer to pay.

d. Create a credit memo for the customer.

What is A Bounced Check:

One of the risks that a company takes one when accepting checks as a form of payment is that there may be a Bounced Check. A Bounced Check occurs when the payee does not have sufficient funds in their account to cover the check.

Answer and Explanation:

The correct answer is a. Generate a statement for the customer.

  • Entering a bill or creating a new invoice will result in double-counting the revenue, which is incorrect. By generating a statement for the customer, the customer will be made aware of the bounced check and will be asked to pay again.

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Accounts Receivable Journal Entries

from Financial Accounting: Homework Help Resource

Chapter 3 / Lesson 20
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