This article is really helpful if you are looking at ways to handle bounced checks from your customers. This happens when the checks are returned due to lack of funds in the customer’s account. You can always record the bounced checks from customers in QuickBooks desktop. The QuickBooks support team lets you know how you can record the checks in different modes.
There are two options available to record the checks. Follow option 1 if you want to record the check in single-user mode or if you want to record the bounced checks in multi-user mode, follow option 2.
Option 1: Using The Record Feature
Note: You can use the record bounced check feature only if you have check payments. If you are unable to click on the option due to payment type, you may be required to manually record the bounced checks .in that case, follow option 2.
1. Open QuickBooks and from the left menu that appears, select Customers> Customer Center.
2. From the Transactions tab, select Received Payments.
3. Look for the payment you want to record as NSF and double click on that.
4. Look for the Record Bounced Check icon on the Main ribbon tab of receiving payment window.
Note that the check has been bounced from the bank and not in a waiting status to be cleared.
5. Enter the required information In the Manage Bounced Check window and click on Next. The information will include some optional fields such as
• Bank Fee and Date
• Expense Account for the Bank Fee
• Customer Fee (what amount the customer was charged with)
NOTE: you may leave the field blank if you didn’t incur any charge or if the customer is not to be charged for the NSF check.
6. You can check the bounced check summary to clarify all the details.
• marked unpaid invoices
• Fees deducted from your bank account
• The fee you want to charge your customer with.
7. Click on Finish.
8. Once a bounced check is recorded, a Bounced Check indicator will be seen on the customer’s payment. This will let you determine that the feature has been used for that particular payment.
9. A journal entry will be created in QuickBooks debiting your receivable account and crediting your bank account. With the recorded check the original invoice will be marked as unpaid, and you can re-invoice the customer for the same amount.
Option 2: Recording The Check-In Multi-User Mode
Follow these steps to record the checks manually and in multi-user mode.
Step 1: creating an account and item
a. How to create an account?
i. From the menu select Lists > Chart of Accounts.
ii. In the Chart of Accounts window that appears, right click and select New.
iii. An Add New Account window will appear. Click on Income> Continue.
iv. Enter Bounced Checks Income in the name field.
v. Click on Save & Close. A new account will be created with the name that you entered in the field.
If you face any trouble while creating the account, contact QuickBooks Customer Support team @ 1 (877) 227 2303.
b. How to create an item?
You would require creating an item for the NSF fee your bank may charge you.
i. From the Lists menu, click on Item List.
ii. Right click on the Item List window, and then click on New.
iii. Select Other Charge from the type drop-down.
iv. Enter Bad Check Charge in the name field.
v. The non-taxable code is to be selected from the tax code drop-down.
vi. Select the account (created in step 1) for this item.
Step 2: (Optional) Recording bank’s NSF fee.
a. Click on Make General Journal Entries from the company menu.
b. Debit your bank service charge expense account with the amount you were charged by your bank for the NSF check.
c. Enter a note in the memo column that describes the transaction.
Example: “NSF check #257 from Mr. Alex.”
d. Checking or bank account is to be credited for the amount of NSF charge.
Step 3: The Original Payment Is To Be Reversed.
a. A journal entry is to be created.
i. Select Make General Journal Entries from the company menu.
ii. For the amount of the NSF check, debit your accounts receivable account In the Make General Journal Entries window.
iii. Enter a note in the memo column that describes the transaction.
Example: “NSF check #257 from Mr. Alex.”
iv. Enter the name of the customer or job that is associated with the NSF check.
v. checking or bank account in which the original deposit has been received is to be credited.
vi. Click on Save & Close.
b. Moving the payment to reverse the journal entry.
i. Go to Reports >Customers & Receivables > Customer Balance Detail.
ii. The NSF transaction will be seen in the original payment line.
iii. Move the checkmark to the reversing journal entry instead of an invoice.
iv. Click on Save & Close.
Step 4: (Optional) if you want to Charge your customer for the bank NSF fee, follow the steps below
a. Select Create Invoices From the customer’s menu.
b. Create the invoice for the NSF check of the customer.
c. Select the Bad Check Charge item in the item field that you created earlier.
d. Enter the NSF charge amount assessed by your bank. You may also add markup (if any).
e. Click on Save & Close.