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Intuit

How to enter a bounced check using a journal entry

You can record a bounced check using a journal entry.

Recording a bounced check using a journal entry requires several steps, each outlined below.

Step 1: Record the bounced check in a journal entry

The first step is to record the bounced check in a journal entry:

  1. Select the Plus icon (+) on the Toolbar.

  2. Under Other, select Journal Entry.

  3. Enter the date the check bounced in the Journal date field.
  4. On the first line, select Accounts Receivable from the Account top-down list.
  5. In the Debits column, enter the amount of the bounced check.
  6. Select the customer from the drop-down list in the Name column.
  7. On the second line, select the bank account from the Account drop-down list.
    The amount should appear automatically in the Credits field.
  8. Enter a notation explaining the reason for the journal entry in the Memo field.
  9. Select Save.

The bounced check is recorded.

The next step is to clear the invoice that was paid with the bounced check, and link the bounced check to the journal entry you created.

 

Step 2: Clear the original invoice and link the bounced check to the journal entry

You must clear the original invoice, paid with the bounced check, and link the returned check to the journal entry:

  1. From the left menu, select Sales or Invoicing.


    Options on the left menu vary based on company setup.
  2. On the Customers tab, select the name of the customer who issued the bounced check to open the Transaction List.

  3. Locate and select the bounced check.
  4. Clear the checkbox of the invoice the check was originally applied to, and select the Journal Entry.
  5. Select Save.

The bounced check is now linked to the journal entry. The next step is to enter the bank service fee for the bounced check as an expense.

Step 3: Enter the bank service fee for the bounced check

Enter the bank service fee for the bounced check as an expense:

  1. Select the Plus icon (+) on the Toolbar.

  2. Under Vendors, select Expense.

  3. In the Payee field, enter your Financial Institution's name.
  4. In the Payment date field, enter the date the check bounced.

  5. Enter NSF fee in the Ref no. field.

  6. Under Account details, select the Bank Charges expense account from the drop-down list in the Account field.

  7. Enter the amount your bank charged you for the bounced check in the Amount column.

  8. Select Save.

The fee is recorded.

The next step is to create Service items for bounced checks and fees to use in recording these charges.

Step 4: Create product service items

You must create Product/Service items for the bounced check and the bank service fee:

  1. Select the Gear icon on the Toolbar.

  2. Under Lists, select Products and Services.

  3. Select New.

  4. In the Product/Service information panel, select Service.

  5. In the Name field, enter Bounced Check.

  6. From the Income account drop-down list, select the bank account the check was returned on.

  7. Select Save and new to create the second item.

  8. Name the second item Bounced Check Fee.

  9. From the Income account drop-down list, select or add an income account called Bounced Check Fees.


    Alternatively, you can select an expense account that you use to track your bank charges.

  10. Select Save and close.

The Service items can now be used.

The next step is to create an invoice for the bounced check fee.

Step 5: Create an invoice for the bank service fee

You must create an invoice for the bank service fee:

  1. Select the Plus icon (+) on the Toolbar.

  2. Under Customers, choose Invoice.

  3. Select the Customer name and enter the date the check bounced in the Invoice date field.

  4. In the Product/Service column, select the Bounced check fee item you created from the drop-down list.

  5. Enter the Amount to charge the customer for the bounced check.

  6. Select Save and close.

The invoice for the bounced check fee is created.

The next step is to send a statement to the customer regarding the bounced check and fees.

Step 6: Print a statement to send to the customer

To print a statement to send to your customer regarding the bounced check fees:

  1. From the left menu, select Sales or Invoicing.

  2. On the Customers tab, select the name of the customer who issued the bounced check to open the Transaction List.

  3. The next step is to create Service items for bounced checks and fees to use in recording these charges.

  4. Select the Statement Type to create from the drop-down list.

  5. Set the Statement Date, Start Date, and End Date.

  6. Select the checkbox for the statement.
  7. Select Print to generate a copy of the statement, or select Save and send to create an email to send to the customer with the statement attached.

The statement is generated for the customer.

When the payment is received, the next step is to record the new payment.

Step 7: Receive the customer's payment for the new invoice

When you receive payment from the customer, you can apply to the new invoice:

  1. Select the Plus icon (+) on the Toolbar.

  2. Under Customers, choose Receive Payment.

  3. Select the customer from the Customer drop-down list.

  4. Enter the Payment date and Payment method for the new payment.

  5. Select the Deposit to account from the drop-down list.

  6. Enter the Amount received.

  7. Select the invoice you created from the Outstanding Transactions list.

  8. Select Save and close.

The payment is recorded.