What journal entry must be prepared when the company is notified by the bank that a customer's check that had been deposited in the amount of $776 was returned NSF?

Debit Accounts Receivable and credit Cash in the amount of $776

Debit Cash and credit Accounts Receivable in the amount of $776

Debit NSF Check Expense and credit Accounts Receivable in the amount of $776

No journal entry is necessary.