Question

How To Account for a Returned Check

Forum|Forum|4 years ago
January 3, 2022
3 replies
49 views

We had a customer pay an invoice via check. We recorded the payment and added the funds to undeposited funds. The bank accepted the check and we matched the bank record to the deposit. Two days later, the bank rejected the check. The customer wanted to pay via credit card and since I couldn't use the original invoice (it was marked paid), I generated a payment link. They paid via credit card and QBO auto generated entries.

How do I record the returned check and the new payment so that the customer's account shows it is a $0 balance.

QuickBooks Online

C

ChristineJoieR

QuickBooks Team

You’re on the right track, @HT10.

I’m here to walk you through the steps how to record the transaction one by one, just stand with me.

Let’s record first the returned check using expense. Here’s how:

1.     Select + New.
2.     Select Expense
3.     In the Payee field, select the name of the customer who's check bounced.
4.     From the Payment Account dropdown, select the account the money was supposed to go into.
5.     In the Payment date field, enter the date you found out the check bounced.
6.     Select and open the Category details ▼ dropdown.
7.     In the Category field, select Accounts Receivable.
8.     In the Amount field, enter the amount of the bounced check.
9.     In the Description field, enter a note, such as "bounced check" or "NSF check."
10. When you're done, select Save and close.

Once completed, this expense will be used to offset the unpaid debt. After that, update the bounced check entry and reopen the original invoice. Here's how to do it:

1.     Go to the Sales or Invoicing menu.
2.     Select the Customers tab.
3.     Find and select the name of the customer who's check bounced.
4.     Find select the record for the bounced check.
5.     In the Received payment window, select and uncheck the box for the original invoice the bad check was attached to.
6.     Select the checkbox for the expense you just created in "Step 1: Enter the bounced check as an expense."
7.     Select Save and close.

You can then make a re-deposit in the same amount. You must also ensure that money is received before closing the invoice.

QuickBooks Online offers a variety of reports to help you gather the information you need for your company. Run Reports In QuickBooks Online is an article that you can read for reference.

Feel free to drop your queries here anytime. I’ll be here to lend a helping hand. Have a great day!

H

HT10Author

Thank you. Clearly I should have reached out sooner. In the mean time, I sent a payment link to the customer in the amount of the invoice. So now, I have an open invoice but I have collected the proper amount from the customer.

Adrian_A

Level 8

Hi there, HT10.

The invoices are showing open since you've created a refund receipt already. We'll have to link the unapplied payment (credit card payment) to the sales transaction so it will be marked as paid.

Here's how:

From the + New button, select Receive payment.
Enter the customer's name.
On the Outstanding Transactions field, select the item.
Select the payment method.
Click Save and close.

You can as well check this link for the detailed steps on the process: Record invoice payments in QuickBooks Online.

However, if you've created another invoice just to send a payment link, you may want to delete it, create a refund, and apply the credit card payment to the correct invoice.

I've also added this article for more information about unapplied credit: Void or refund customer payments in QuickBooks Online.

Keep me posted if you have other questions about your A/R account. Have a good day ahead.

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