A non-sufficient funds or bounced check can be recorded in QuickBooks with the Record Bounced Check feature, a feature that ensures that the accounts are kept accurate and balanced. Further, the record of the bounced check is saved in QuickBooks. However, users can also record a bounced check manually in QuickBooks.
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Record Bounced Check in QuickBooks Desktop
A simple way to understand how to record bounced or NSF checks from customers in QuickBooks Desktop for Windows and Mac.
Recording with the Record Bounced Check Feature
To use the record bounced check feature, QuickBooks must be in the single-user mode. Only the check payments done though the Customer Payment window can be recorded as bounced checks with this feature. All grayed items cannot be recorded as bounced through this inbuilt feature, but users can still record them manually.
To use the Bounced Check Feature in QuickBooks, follow the steps provided below:
- From the Customers menu, select Customer Center.
- Go to the Transactions tab, and select Received Payments.
- Select the Payment you want to record as bounced or NSF (Non-sufficient funds).
- Click on the Record bounced Check icon from the Main Ribbon tab.
- The Manage Bounced Check window will appear. Enter the importation mentioned below, then click on Next:
- Bank Fee Expense Account
- Customer Fee (Amount that will be charged to the customer)
- Bank Fee
- View the Bounce Check Summary. Here are the messages that you may receive:
- The following fees will be deducted from your bank account.
- The following invoices will be marked unpaid.
- The invoice will be created for the fee you want to charge your customer.
- Click on Finish.
Note: The check shouldn’t be recorded in the undeposited funds account, as it would’ve already cleared the bank. Only after clearing the bank, it would have been marked as bounced.
You have successfully recorded as NSF or bounced check. The records will be maintained in QuickBooks. You can also enter the Customer Fee, which is the fee that you will charge the customer for providing a bounced check.
Read More: How To Cancel A Check Payment In QuickBooks?
Manually Recording the Bounced Check in QuickBooks Windows
For checks which have the payment method grayed out, you need to record the NSF or bounced check manually. This may happen if the check payment wasn’t down through the customer payment window. Manually recording the check may be time consuming, but it is important in order to maintain the current balance and record.
To manually record a bounced check in QuickBooks, follow the steps provided below:
- Create a new Income Account.
- From the Lists menu, click on Chart of Accounts.
- Click on the Account dropdown menu, then New.
- Select the Type of account as Income Account. Hit Continue.
- Enter the name of the account as Bounced Check Income.
- Enter the rest of the required details.
- Click on Save and Close.
- Create an Item for Bad Checks.
- From the Lists menu, click on Item List.
- Click on Item, then New.
- Select ‘Other Charge’ as the item type.
- Fill in the required details:
- Among: 0
- Item Name: Bad Check Charge
- Account: Choose the Bounced Check Income account created in Step 1.
- Tax Code: Non-taxable
- Click on Save.
- Post a Journal Entry, which will be used to reverse the original payment.
- Click on Company, and select Make General Journal Entries.
- Debit the NSF/Bounced Check amount from the receivables account.
- Enter a description of the transaction in the memo.
- Enter Customer or Job Name in the Name column.
- Credit the NSF/Bounced Check amount from the checking or bank account in which the funds were originally deposited.
- Click on Save and Close.
- Go to the Reports menu, and click on Customers Receivable.
- Select Customer Balance Detail.
- Select the line in which the NSF/bounced check transaction was recorded.
- The Receive Payments window will appear, and in this window, you need to remove the invoice and select the Reversing Journal Entry as the payment.
- Click on Save & Close.
- Send the Invoice to the Customer. (Optional)
- Select the Invoice for which the customer provided the bounced check.
- Add the Bad Check Charge item to the invoice. If you don’t want to charge a customer fee, then don’t enter this item to the invoice.
- Click on the Email icon, then Send.
You’ve successfully recorded the bounced check in QuickBooks Desktop. The step to send the invoice including the customer fee to the customer is optional.
Record Bounced Check in QuickBooks for Mac
The Bounced Check feature can only be used to record checks that are customer payments. Also, the check must not be in the undeposited funds account. To record bounced check in QuickBooks for Mac, follow the steps provided below:
- From the Customers menu, click on Receive Payment.
- Select the Check that bounced and click on Bounced Check.
- Enter the required information like customer fee, bank fee, etc. A bank service charge expense account will automatically be created by QuickBooks.
- Click on Next and review the information provided by QuickBooks.
- Select Record. The status of the invoice will be changed to unpaid and outstanding. The customer charge will be included within the invoice. Further, QuickBooks will create an account to record the customer fee, if such an account doesn’t already exist.
Before you click on record, read the explanation provided by QuickBooks. In the explanation, you’ll find what happens when you mark the check as a bounced check. Further, a reversing Journal Entry will be created by QuickBooks to balance the accounts.
To know more, you can get in touch with our experts at our Live Chat.
Frequently Asked Questions:
How do I manually record a check as bounced in QuickBooks?
The steps are similar to the ones provided for QuickBooks Desktop. The differences are only in name of the menu, but that can be figured out quite easily.
Is it important to create a reversing journal entry?
Yes. It is vital that you create a reversing Journal Entry in QuickBooks Desktop. However, a reversing journal entry is automatically created in QuickBooks for Mac.