A customer paid me by check and I properly recorded it as a Debit to cash and credit to accounts receivable through the customers/ receive payment method. A few days later the customer illegally put a stop payment on the check. How do I account for this? Thank you in advance.
Hello there, @mforest.
There are two different ways that you can record this transaction. You can manually record or use the Record Bounced Check feature. This is to ensure that all related details on bounced check transactions are addressed to keep your account balanced and organized. No worries, here's a Community Article that walks through both processes with ease: Handle Non-Sufficient Funds (NSF) or bounced check from customers.
Let me know how this goes for you! I'm always here if you need further assistance. Have a great day.
Yes I did do it that way as follows:
NOTE: All these fields are optional. You can leave them blank if you didn't incur any charge or if you do not want to charge the customer for the NSF check.
The problem is that now my bank rec is off by the amount of the canceled check. How do I get this into my bank rec window? Also this customer is long gone, so I want to write it off to a 0 balance. How do I do that too?
Okay, disregard. The journal entry QB used to debit accounts receivable and credit cash had the wrong year. Now bank rec balances.
Now how do I get that balance out of the receivable? Ill never collect it.
Hi there, mforest.
When invoices we send become uncollectible, you need to record them as a bad debt and then write them off. This ensures our Accounts Receivable and net income stay up-to-date. Let's pull up the our Account Receivable Aging Detail report first to check the outstanding accounts receivable to be written off. Just go to the Reports menu and search the report.
Then, we can create a bad debts expense account and if we have an existing one we can use it. After making an account, we'll also enter a bad debt item to use it on our credit memo. From there, we can apply the credit memo with the bad debt item to the invoice.
Create a bad debts expense account
Create a bad debt item
Create a credit memo for the bad debt
Apply the credit memo to the invoice
Now we can run a report to check all the receivables we tagged as bad debt. We'll just have to go to our Chart of Accounts and in the Action column of the Bad Debts account, click Run report. Also, the uncollectible receivables will now appear on your Profit and Loss report under the Bad Debts expense account.
Feel free to get back to me if you need anything else. Stay safe!