The bank statement of Zone Supplies included a \($200\) NSF check that one of Zone’s customers had written to pay for services that were provided by Zone.

Required:

a. Show the effects of recognizing the NSF check on the financial statements by recording the appropriate amounts in a horizontal statements model like the following one.

b. Is the recognition of the NSF check on Zone’s books an asset source, use, or exchange transaction?

c. Suppose the customer redeems the check by giving Zone \($225\) cash in exchange for the bad check. The additional \($25\) paid a service fee charged by Zone. Show the effects on the financial statements in the horizontal statements model in Requirement a.

d. Is the receipt of cash referred to in Requirement c an asset source, use, or exchange transaction?

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Assets Cash + Accts. Rec. == Liab. + Equity Rev. - Exp. =1 Net Inc. Cash Flow