Check bounced at a third party location

Thanks for letting us know, mdjimenez. I'm here to provide details on managing a bounced check.

To handle a bounced check by your vendor in QuickBooks Online(QBO), create a journal entry and a bill payment check. You don't need to void the original Bill Payment Check because it may be in a previous accounting period.

First, enter a reversing journal entry. Here's how:

1. Go to the +New button, 
2. Select Journal Entry.
3. Make sure the Date and Entry No are correct.
4. Debit the checking account for the amount of the NSF check.
5. Credit the A/P account for the amount of the NSF check.
6. Enter the vendor name on the Name tab.
7. (Optional) Enter memos and classes.
8. Select Save & Close.

Next, un-link the bill from the payment check and link it to the journal entry.

1. Open the original bill payment check.
2. Uncheck the bill by the bill payment check.
3. Check the Journal Entry created in Step 1.
4. Enter a Memo to indicate the check was returned for NSF.
5. Select Save & Close.

Moreover, check out this article and refer to steps 4 and 5 to learn more about the process: Manage a bounced check you wrote in QBO.

Finally, you can access this resource to learn how to enter your income and expenses to have professional-looking books: Enter and manage bills and bill payments in QBO.

We're always here for you if you need further help managing checks in QuickBooks. Feel free to comment below

Thank you for your response. I can't get this to work the way I need it to. The first check cleared my bank account and did not bounce back to me. The check cleared my bank account. The contractor took it to the party store and got his money. The check then did not clear the party store's bank. I need to write a second check to reimburse the party store because they basically loaned me the money to pay the contractor. It's confusing to me! 

Hi there, mdjimenez12.

I appreciate you returning to the thread and asking for clarifications on recording bounce check transactions in QuickBooks Online (QBO). 

In order to record your bounced check, we need to convert your check to an Accounts Payable, and then create a Journal Entry to match the initial check with your bank feeds. To achieve this, please follow the steps provided below.

First, let's change your check category to Account Payables. 

1. Open the check entry in QBO.
2. Change the Expense account to Accounts Payable.
3. Once done, click Save & Close.

Next, let's create a reversing journal entry. Here's how:

1. At the upper right panel, click + New.
2. Pick a Journal entry.
3. Select an account from the Accounts field at the beginning of this line. The amount must be entered into the right column, assuming you are a debit or credit account.
4. Choose another account to transfer money to or from on the next line. You may enter the same amount in the opposite column, depending on whether or not you have entered your debits and credits from the first line.
5. Check the amounts - you should have the same amount in the Credit column on one line and the Debit column on the other. This means the accounts are in balance.
6. Enter information in the memo section so you know why you made the journal entry.
7. Then choose Save and New or Save and Close.

After that, create a second check for the reimbursement that was paid to the party store. 

Also, I’m adding this article you can check about deleting your journal entry in QBO: Reverse or delete a journal entry in QuickBooks Online.

 Keep me posted if you need help recording your bounced check in QBO. I’ll jump right back in to assist further. Have a happy holiday!