Franklin Company's bank reconciliation as of August 31 is shown below. Bank balance $14,237 Book balance $13,162 + Deposit in transit 4,500 Bank service fees -50 - Outstanding checks -3,900 Note collected 1,725 Adjusted bank balance $14,837 Adjusted book balance $14,837 The adjusting journal entries that Clayborn must record as a result of the bank reconciliation include:
A. Debit Cash $4,500; credit Sales $4,500.
B. Debit Misc. Expense $3,900; credit Cash $3,900.
C. Debit Cash $1,725; credit Notes Receivable $1,725.
D. Debit Notes Receivable $1,725; credit Cash $1,725.
E. Debit Cash $50; credit Bank Service Fee Expense $50.
Answer: C
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