How do I record a returned check used for an expense that was later debited from my account?

Thanks for posting a question here in the Community, gary37.

A check bounces when your bank account doesn’t have enough money to cover the check amount. When this happens, your bank charges you a bank fee.

On that note, allow me to give you some scenarios so you can record bounced check transactions you have in QuickBooks Online.

First, record the bank fee if your bank covers the bounced check and charges you a bank fee. This is because your check was already processed. Here are the steps to record this in QuickBooks Online:

1. Click the + New button then choose Expense.
2. From the Payee ▼ drop-down menu: Choose the vendor if the bank charged it to them. Select the bank if they charged it to your account.
3. Pick the account you use to pay expenses from the Payment account ▼ drop-down menu.
4. You may enter the “NSF (non-sufficient funds) fee” in the Ref no. field to distinguish it from other expenses.
5. Click Bank Charges under the Category column.
6. Enter the amount you were charged for and hit Save once done.

The second scenario is to record the bank fee and void the check if your bank doesn't cover the bounced check and your vendor returns the check without redepositing it. This is because your vendor didn’t accept it as payment.

Below are the steps on how to record it:

1. Go to the Expenses menu, then choose Vendors.
2. Select the vendor you paid then locate and choose the bounced check.
3. Click More, then pick Void from the pop-up menu.
4. Confirm you want to void the check, then select OK.

Once done, you may now record the bank fee. Here's how:

1. Click the + New button then choose Expense.
2. From the Payee ▼ drop-down menu: Select the vendor if the bank charged it to them. Choose the bank if they charged it to your account.
3. From the Payment account ▼ drop-down menu, select the account you use to pay expenses.
4. You may enter the “NSF (non-sufficient funds) fee” in the Ref no. field to distinguish it from other expenses.
5. Under the Category column, choose Bank Charges.
6. Enter the amount you were charged for then hit Save to confirm.

You may refer to this article for more scenarios about bounced checks. This way, you'll be able to record it in QuickBooks Online successfully: How to record bounced checks.

If everything's looks fine, you can now proceed reconciling your account: How to reconcile an account in QuickBooks Online.

Please let me know if I can be of help by leaving a comment below. Take care and have a wonderful day!

Hello, I'm wondering if anyone can help me here.  If I understand this original question correctly, the answer doesn't apply because the bank did cover the check when it was presented a second time.  I have the same situation.  My bank account is linked in my QB account and it records the a check (we'll call it check #1 for $100) as a debit on day 1.  On day two check #1 was returned and shows as a credit of $100.  On day three check #1 was represented and again shows as a debit of $100.  How do I categorize the debit on day 1 and the credit on day two?  They didn't charge me an overdraft fee so I'm not concerned with that.  

Hello there, @AffordableLHC.

I'll share with you the guidelines for entering the following transactions into your QuickBooks Online (QBO).

Let's start creating a bank deposit for day one; since the bank has been debited with the check amount. It is to match it with the transaction you have in the banking tab.

Next, you will have to record the bounced check as an expense you received in your company file that the bank credited back to your account.

Lastly, since the check has been successfully debited from your account, we can create another bank deposit to match them.

Here's how to make a bank deposit:

1. On the + New.
2. Select Bank Deposit.
3. From the Account ▼ dropdown, choose the account you want to put the money into.
4. Choose the checkbox for each transaction you want to deposit.
5. Make sure the total of the selected transactions matches your deposit slip. Use your deposit slip as a reference.
6. Select Save and close.

These are the steps on how to record a bounced check as an expense:

1. Go to + New.
2. Select Expense.
3. In the Payee field, select the name of the customer whose check bounced.
4. Click the Payment Account dropdown, and 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. Choose and open the Category details ▼ dropdown.
7. In the Category field, select Accounts Receivable.
8. Under the Amount field, enter the amount of the bounced check.
9. And in the Description field, enter a note, such as "bounced check".
10. Once done, select Save and close.

You'll want to reach out to your accountant regarding categorizing these transactions. This is to ensure that this will be posted to the proper account.

You may visit these links to guide you on how to categorize your transactions and reconcile your account flawlessly:

• Categorize and match online bank transactions in QuickBooks Online.
• Reconcile an account in QuickBooks Online.

The Community always welcomes you for further inquiries with regard to transactions. Have a great day ahead!