Often the depositor's bank will also charge a fee for handling the returned item. Since that fee is automatically deducted on the bank statement, the amount needs to be deducted from the depositor's Cash account. The journal entry will be a credit to Cash and a debit to another account such as a receivable account.
A simple rule is that the adjustment must go where the item is not yet present. Since the return item and the related bank fee are already on the bank statement, the adjustment must go to the general ledger accounts.
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