Accounting for a canceled check.

Does anyone have any ideas?  I cant complete my bank rec without this.

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:

1. From the QuickBooks Customers menu, click Customer Center.
2. Go to the Transactions tab and click Received Payments.
3. Double click the payment you want to record as NSF.
4. On the Receive Payments window, click the Record Bounced Check icon on the Main ribbon tab. Note that the check must not be waiting to be cleared in the Undeposited Funds account, as it would have to have cleared the bank in order to bounce.
5. In the Manage Bounced Check window, enter:
   • Bank Fee and Date
   • Expense Account for the Bank Fee
   • Class
   • Customer Fee (how much you charged the customer)

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.

1. Click Next.
2. QuickBooks will then show you the Bounced Check Summary, letting you know what happened behind the scenes. For example, you may see:
   • The following invoices will be marked unpaid
   • The following fees will be deducted from your bank account
   • This invoice will be created for the fee you want to charge your customer.
3. Click Finish.
4. You will then see a Bounced Check indicator on the customers payment letting you know you just used the bounced check feature on that payment.
5. QuickBooks creates a journal entry debiting your accounts receivable account and crediting your bank account. The original invoice is marked unpaid, so you can re-invoice the customer.

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

1. Go to Accounting menu and select Chart of Accounts.
2. At the upper right, select New to create a new account.
3. From the Account Type drop-down, select Expenses.
4. In the Detail Type field, click Bad debts.
5. In the Name field, enter “Bad debts.”
6. Hit Save and Close.

Create a bad debt item

1. From the Sales menu, select Products and Services.
2. At the upper right, select New, and then Non-inventory.
3. In the Name field, enter “Bad debts.”
4. From the Income account drop-down, select Bad debts.
5. Click Save and Close.

Create a credit memo for the bad debt

1. Select + New and select Credit memo.
2. Select the customer and enter other details.
3. In the Product/Service section, select Bad debts and enter the amount you want to write off.
4. Select Save and Close.

Apply the credit memo to the invoice

1. Go to the + New button and click Receive payment.
2. From the Customer ▼ dropdown, select the appropriate customer.
3. Under the Outstanding Transactions section, select the invoice.
4. From the Credits section, select the credit memo.
5. Select Save and Close.

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!