This is Atiyah-Macdonald Exercise 2.2
Exercise: Let $A$ be a ring, $\mathfrak a$ an ideal, $M$ an $A$-module. Show that $(A/\mathfrak a) \otimes_A M$ is isomorphic to $M/\mathfrak aM$. [Tensor the exact sequence $0 \to \mathfrak a \to A \to A/\mathfrak a$ with $M$.]
I would like to verify my proof. It will be posted as a community wiki. Leave comments or edit, but if you edit, make the text red or at least make the edit obvious to distinguish my original approach, with what is incorrect or can be better written, etc.
Also, feel free to post alternate proofs.
This is mostly similar to your argument, but much easier.
From the exact sequence $0\to\mathfrak{a}\to A\to A/\mathfrak{a}\to 0$ we get the commutative diagram with exact rows $$\require{AMScd}\def\ma{\mathfrak{a}} \begin{CD} {} @. \ma\otimes_AM @>>> A\otimes_AM @>>> A/\ma\otimes_AM @>>> 0 \\ @. @VVV @VVV @VVV \\ 0 @>>> \ma M @>>> M @>>> M/\ma M @>>> 0 \end{CD} $$ where the leftmost vertical arrow is surjective and the middle vertical arrow is an isomorphism. A standard diagram chasing shows that the arrow $$ A/\ma\otimes_AM\to M/\ma M, $$ defined by $(a+\ma)\otimes x=ax+\ma M$ so as to make the diagram commutative, is an isomorphism too.