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Franz Reyes
Level 1

Expense Refund due to Bounced Payment

Good day to you QuickBooks Community:

 

I'm not an accounting major or anything but I am managing the accounting of a company I'm working for using QuickBooks Online. We recently paid a vendor but the payment got bounced. How do I categorize the 2 transaction to cancel each other out? Since I don't want the received deposit to be in the income or sales category cause it may be taxable or something. Total newbie here, so I really appreciate every help you could offer. Thank you very much.

3 REPLIES 3
TirzahC
QuickBooks Team

Expense Refund due to Bounced Payment

Welcome to the Community, Franz Reyes.

 

You’ve come to the right place and I’m able to help you record a bounced check. 

 

As of this scenario, you can record the bank fee and void the check if your bank doesn't cover the bounced check and your vendor returns the check without redepositing it. This is because your vendor didn’t accept it as payment. I'd be glad to show you how to do that. Please be guided by the steps below:

  1. Go to the Expenses menu, then choose Suppliers.
  2. Select the supplier you paid then locate and choose the bounced check.
  3. Click More, then pick Void from the pop-up menu.
  4. Confirm you want to void the check, then select OK.

Once done, you may now record the bank fee. Here's how:

  1. Click the + New button then choose Expense.
  2. From the Payee ▼ drop-down menu: Select the vendor if the bank charged it to them or Choose the bank if they charged it to your account.
  3. From the Payment account ▼ drop-down menu, select the account you use to pay expenses.
  4. You may enter the “NSF (non-sufficient funds) fee” in the Ref no. field to distinguish it from other expenses.
  5. Under the Category column, choose Bank Charges.
  6. Enter the amount you were charged for then hit Save to confirm.

I still suggest consulting an accountant to help you properly organize or record those entries in detailed information on what steps you use to that fits your situation. 

 

You may refer to this article for more scenarios about bounced checks. This way, you'll be able to record it in QuickBooks Online successfully: What to do if your cheque bounces and your bank account has non-sufficient funds.

 

You can always count me in if you have questions about this process. I'll be here to help. Take care.

Franz Reyes
Level 1

Expense Refund due to Bounced Payment

The transactions are not in checks. It was done by wire transfer. My boss is more than willing to let go of the wire transfer fees, he just needs the return money to be categorized correctly since this happened a few years back and the previous guy who handled these transaction just categorized them as commission expense (the money we sent out) and commission income (the money that came back). But it is not considered income since it just came back. It's really confusing for me. Thanks.

MadelynC
Moderator

Expense Refund due to Bounced Payment

Thanks for the clarification, Franz. I’m here to help you document the returned wire transfer in QuickBooks.


You can categorize the returned amount directly in the bank feed screen using the Split feature. This way, you can correct the account and its value.


Here’s how:

 

  1. Go to the Banking page.
  2. Find and open the wire transaction.
  3. Select the Split button.
  4. Add the vendor name.
  5. Select the right account in the first line, then enter the amount.
  6. In the second line, you can use the Bank fees or Service charge for the wire transfer fees then add a minus sign to the amount. This will make the transaction net correct.
  7. You can enter a memo then press Apply and accept.


Also, you can contact your accountant about this. He/she can provide additional information and help you with the process to ensure everything is accurate.


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I’ll be around to help if you have other payment concerns or questions. Just add them to your reply. Have a great day and always take care!

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