Reference no: EM132490208

Han's Supplies' bank statement contained a $260 NSF check that one of its customers had written to pay for supplies purchased.

1. Show the effects of the following transactions on the financial statements in the horizontal statements model. (a) Recognize the NSF check, (c) Customer redeems the check by giving Hans $280 cash in exchange for the bad check. The additional $20 was a service fee charged by Hans. In the Cash Flow column, use OA to designate operating activity, IA for investment activity, and FA for financing activity. If the element is not affected by the event, leave the cell blank. (Enter any decreases to account balances and cash outflows with a minus sign.)

Question 1: Is the recognition of the NSF check on Han's books an asset source, use, or exchange transaction?

• Asset source
• Asset use
• Asset exchange

Select which of the following is the correct answer.

1. Asset exchange is $280.
2. Asset source is $280.
3. Asset use is $280.
4. Asset exchange is $260 and Asset source is $20.
5. Asset source is $260 and Asset use is $20.
6. Asset exchange is $280 and Asset use is $20.