Once a month, a client processes all of the customer direct debit payments in one batch. A customers payment has been returned stating that the customers account has been closed. What is the first thing that needs to be done to record this transaction?

• Create a journal entry to debit the bank account and credit the accounts receivable (A/R) account
• Create an expense transaction, allocate to bank fees and then to the client as a billable expense.
• Create a service item called bounced checks.
• Create a journal entry to credit the bank account and debit the Accounts Receivable account.
• Create an invoice to the customer, and allocate the amount directly to the bank account in the account details.