A customer owes \$1,200 but pays only \$700. How should the company adjust its accounts receivable?

Debit Cash \$700; Credit Revenue \$700.

Debit Cash \$1,200; Credit Accounts Receivable \$1,200.

Debit Accounts Receivable \$700; Credit Cash \$700. Remaining balance in Accounts Receivable is \$500.

Debit Cash \$700; Credit Accounts Receivable \$700. Remaining balance in Accounts Receivable is \$500.