Returned Donation Checks

Thank you for posting here in the Community, @jeffbrown614.

Let me guide you on how to record returned donation checks in QuickBooks Desktop. 

To start, you can create an item, and income account for tracking bounced checks and their associate's charges.

Once done, create a journal entry to reverse the original payment. Here's how:

1. Go to the Company menu, then select Make General Journal Entries.
2. In the General Entries window, debit your account receivables for the same amount of the NSF check.
3. Enter a note in the Memo column describing the transaction.
4. Choose the name of the customer or job associated with the NSF check, under the Name column.
5. Credit the checking or bank account that received the original deposit.
6. Click Save and Close.

After, switch the payment for the invoice to the reversing journal entry.

1. Go to the Reports menu.
2. Select Customers Receivables, then choose Customer Balance Detail.
3. Double-click the original payment line for the NSF transaction.
4. In the Receive Payments window, move the checkmark from the invoice to the reversing journal entry.
5. Select Save & Close.

For additional information, you can refer to this article for details: Handle Non-Sufficient Funds (NSF) or bounced check from customers.

In case you want to handle a check returned by your vendor due to non-sufficient funds, you can check this article: Manage a bounced check you wrote.

Please let me know if there's anything I can help you with QuickBooks. I'm always around whenever you need help. Have a nice day.

Thanks for this but I'm not sure I've done this correctly. The returned checks are from donors, not customers. Two are to our General Fund and one to our Building Fund. The checks were all part of a batch of multiple checks. 

You mentioned creating an item, and income account - not sure what you mean by this. I did steps 1-6 and put the name of the person in the Name column as a customer and I see the entry listed as a payment. Not sure how to proceed from there and if I've even done that correctly. Guess what is confusing me is that these persons are not customers but making donations - there are no invoices, etc. Sorry if I'm not understanding - I'm new to the job (quite unexpectantly) and not a CPA.

Hi there, @jeffbrown614.

Thank you for reaching back to the Community. Good job in creating the Journal Entry. The reason why you don't see the receive payments its because you haven't run any invoice. So journal entry helps you record the transaction. 

After creating a journal entry, we need to switch the payment for the invoice to the reversing journal entry to receive the payments. You can follow my colleague steps provided above. 

To learn more how journal entry works, you can check out this article: A QuickBooks Refresher on Journal Entries. 

I suggest reaching out to your account for advice to prevent any discrepancies in your book. 

You can also check this article how to handle bounce check: Manage a bounced check you wrote. 

Please let me know if you need anything else, I'll be here to lend a hand. Have a great day!

Jeff,

Like you I volunteer as treasurer for my church and am not an accountant.  I handle returned donation checks in a simpler fashion than others have described, especially when they were deposited in a batch with many other good checks and when, as is often true today, the bank does not charge an NSF fee.

To start, skip what was said about creating an item, and an income account for tracking bounced checks and their associated charges.  If there are charges, you can create an expense account called something like bank fees to enter and track those if you don't already have such an account.

Create a journal entry to reverse the original deposit. Here's how:

1. Go to the Company menu, then select Make General Journal Entries.
2. In the Make General Journal Entries window, enter the date the items were returned per your bank records.
3. Debit your income account(s) for the same amount(s) of the NSF check(s).  Use the same income account(s) as the ones to which the donations were originally credited.
4. If the donations were to separate funds as you have indicated, and if you use separate income accounts for each fund, then you will have multiple lines with debits to those different income accounts.  For instance, one line will be a debit to your General Fund Contributions Income account and another line will be a debit to your Building Fund Contributions Income account.
5. Enter a note in the Memo column describing the transactions as returned check(s).
6. On another line credit the checking or bank account that received the original deposit.
7. If the donations were to separate funds as you have indicated, and if you use separate bank accounts for each fund, then you will have multiple lines with credits to those separate bank accounts.
8. If you use classes to track your fund balances, be sure to enter the appropriate Classes (funds) in the Class column in each of your debit and credit lines.  If you use one bank account for multiple funds, you will need to split up the credits among multiple lines with a different class's transactions on each line.
9. When you finish, make sure your debits and credits equal one another in amounts.  Also make sure your debits and credits for each class (fund) equal one another.  Otherwise, when you later run a Balance Sheet by Class, you will find Unbalanced Classes at the bottom.
10. Click Save and Close.

Hope this helps.