Check returned due to stop payment

Teesa66 · ‎May 07, 2021

Hi y'all! One of our customers mailed a payment in December. When it hadn't arrived by March, they issued a replacement check and put a stop payment on the one that was lost. Low & behold, USPS delivered the original check last week (nearly 6 months later) and it was included on a bank deposit. So now I have a returned deposit item that is NOT a bounced check from my customer. How do I clear this up in QBO?

Any guidance would be appreciated!

Terri

MaryLandT · ‎May 12, 2021

Thank you for getting back to us, Teesa66.

Let's clear the balance on the customer's account. Writing a check to record the refund reduces your bank's balance and offsets the customer's prepayment.

Before matching it with the bank transaction, you need to link the check to the customer's payment. Make sure to use Accounts Receivable as the category of the check so you can link these transactions.

I'm adding these steps for the solution:

Step 1: Record the refund for your customer

Click + New.
Select Check.
Select the customer you want to refund from the Payee ▼ drop-down.
From the Payment account ▼ drop-down, select the bank account where you deposited the overpayment to.
On the first line of the Category column, select Accounts Receivable.
Enter how much you want to refund in the Amount field.
Fill out the other fields as you see fit, then select Save and close.

Step 2: Link the refund to the customer's credit or overpayment

Click + New.
Select Receive payment.
Select the same customer you used for the check or expense when recording the refund.
Fill out the other fields as you see fit.
Under the Outstanding Transaction section, mark the check you've created when recording the refund.
Make sure the payment is equal to the open balance, then select Save and close.

After performing these steps, you'll want to go to the Banking page, then proceed to the Categorized tab. Locate the check you've matched and click Undo.

The check is posted back on the For review tab. That's the time you match it with the one you manually enter in QuickBooks. Doing this will prevent duplicate entries.

Also, you'll record a refund to your customer using Check or Expense if:

They want to redeem their open credits .
They made a prepayment for an order but canceled it before receiving the goods or services.
They want you to reimburse an accidental overpayment.

If they used a credit card, learn how to refund a credit card payment.

Let me know if there are other things you need in handling customer's refund. I'll be right here to help you.

View solution in original post

Jen_D · ‎May 07, 2021

It's good to see you here, @Teesa66,

If you want to record a returned deposit, you can simply write a check. This is to show the amount of the customer's check was deducted from your bank balance.

For the replacement check, you can record it as a journal entry then apply it as a payment towards the original invoice. Here's how:

Go to the Plus icon (+) at the top, and select Journal Entry.
Enter the date the check bounced.
From the Account drop-down, choose the account where it was posted.
Under the Debit column, enter the amount.
From the Name drop-down, select the customer name.
On the second line, click on the Account drop-down and choose the bank account.
Enter the notes in the Memo box.
Once done, click on Save.

Once done, receive the payment, using the steps in this article: Record invoice payments in QuickBooks Online

Regarding the process for bounced checks, there are a few ways to handle the accounting. You can use an expense or a journal entry. Follow the method that works best for you.

If you need further help with the process, please let me know in the comment. I'll be right here if you need anything else. Have a good one!

Teesa66 · ‎May 12, 2021

@Jen_D Thanks for the response. I'm still struggling, though. I wrote a check using the customer as the Payee and the bank account as the category. QBO matched this check to the returned deposit item, thus addressing the banking issue. However, since this payment was initially entered as a duplicate payment on the customer's account, the deposit item is still showing incorrectly as an unapplied credit on the Customer's account. How do I clear this from the customer's account?

MaryLandT · ‎May 12, 2021