Exercise 6-7A (Algo) Treatment of NSF check LO 6-3

Han's Supplies' bank statement contained a $220 NSF check that one of its customers had written to pay for supplies purchased. Required

1. Show the effects of recognizing the NSF check on the financial statements by recording the appropriate amounts in a horizontal statements model.
2. Is the recognition of the NSF check on Han's books an asset source, use, or exchange transaction?
3. Suppose the customer redeems the check by giving Han's $250 cash in exchange for the bad check. The additional $30 paid a service fee charged by Han's. Show the effects on the financial statements in the horizontal statements model.
4. Is the receipt of cash referenced in Requirement c an asset source, use, or exchange transaction?
5. Record in general journal form the adjusting entry for the NSF check and the entry for redemption of the check by the customer.