Trying to resolve an issue. A $500 wire payment was made to a client and was recorded as an expense as there was no actual bill received. That wire was reversed as it was sent to an incorrect account. The bank, of course, deducted fees for the reversal from the amount so only $455 shows being deposited back to the checking account. How do I enter the transactions/deposit to show under the client account so it displays that the total amount paid to the client is only $1000 and not $1500 (a corrected wire was sent the next day and then another payment sent at a later date)? If the transactions were the same amount, I would just exclude them, but since they aren't, I'm not sure how to handle correctly.
Screenshot attached to show what I mean.
Solved! Go to Solution.
Hello there, t1gerk.
Welcome aboard in the Online Community. I’m here to ensure the bank fee is properly recorded so it won’t throw off your record.
In situations like this, you’ll need to create an expense account to record the deducted fee. I’ll walk you through the steps:
- Go to Accounting on the left panel.
- Then select Chart of Accounts.
- Click on the New tab.
- Click on the Account Type drop-down and choose Expenses.
- Under Name, enter Bank Fees.
- Click on Save and Close.
Once done, let’s go ahead and create a Product/Service item. Please follow the step by step instructions below:
- Go to the Gear Icon at the top.
- Select Products and Services.
- Choose New on the right hand side
- Select Service.
- Then name it Bank Fees.
- Under Income Account, select the Expense account you just created.
- Click on Save.
Next, write a check and set the check number to EFT. Just make sure to select the Bank Fees account and enter the amount.
That'll do it. After following the resolution steps, the bank fee will be correctly recorded in QuickBooks.
Let me know if you have questions about working in QuickBooks. I'll be right to answer them. Have a great day ahead.
Thank you for the reply, but I'm not sure that answered my actual questions.
The vendor account currently shows that we have a total of $1500 in expenses that have been paid, but only $1000 has truly been paid due to the returned wire. How do I make the account reflect that with the "deposit" of the reversed wire?
Sorry if I'm not following what you mean.
Hello again, t1gerk.
Thanks for keeping me posted. I'll guide you through the steps on how to record the return payment.
You’ll need to create a $500 deposit and post the amount to your Accounts Payable. Doing so will show that your vendor still owes you that amount.
- Click on the Plus (+) icon at the top.
- Choose Bank Deposit.
- Select the correct bank account.
- In the Add funds to this deposit table, enter the vendor’s name.
- In the Account section, make sure to select Accounts Payable.
- Fill in the necessary fields.
- Enter $500 in the Amount section.
- Click on Save and close.
If there's anything else that I can help you find in QuickBooks, leave a comment below. I'm here to lend a helping hand.
Hi there @T1gerK:
@lynda and I want to help you (and others) out with your tricky transaction. So, it is our understanding that you paid your vendor using an expense and then the payment was sent back with the fees deducted from the bank. Your original bill from your vendor was $1,500.00. You paid $500 and then that payment was returned as $455 and a bank fee charged for $45.00. You wanted to know how to show the correct total bill paid and reflect the bank charges as well.
In this video, we walk you thru the above scenario and demonstrate how to tackle this intricate transaction.
Basically, you need to do the following:
First we demonstrate the initial bill in the system for 1500.00 and the previous payment for 1000.00 This leave you with an outstanding balance of $500 on the bill.
- Pull up the vendor that had the bill, in our example we used your screen name. and locate the expense that was pushed through the bank feed but not matched as a bill payment.
- Go to the expense (wire) of $500.00, open it and add the bill from the tray to turn that expense into a bill payment. This will make the bill paid in full
- Now to document the returned wire transfer:
- Go to the bank feed screen.
- Find the deposit transaction for $455 (which was the $500 -$45 fee).
- Open it by clicking "add" and then click the split button on the screen.
- Add the vendor name FIRST and then the account accounts payable there for the first line.
- Enter the amount of $500.
- Drop down a line and add the expense for the bank fee to bank service charges and a minus -$45.00 line item. This will make the transaction net at $455.00
- Once you complete and save all the steps above , it will raise the balance for that vendor back up by the $500 that was returned.
- Go back to the vendor and pay the remaining balance of $500.00. against the Accounts Payable Balance.
Now, we hope that we understood your question. If not, please reach out to us. We are here to help you!
YES!! Thank you so much- this explained/answered everything!
I guess the biggest thing I wasn't getting was that I had to put in an actual bill to apply the "expense/payment" towards. Thank you both!
In QuickBooks Desktop, you can record the returned wire as a deposit. First, you'll have to enter the bill in the system and make a payment just like ParkwayInc's example.
Then, follow these steps to record the returned wire:
- Click Banking located at the top.
- Select Make Deposit.
- Choose the bank account from the Deposit To drop-down list.
- Select the Date.
- In the first line, choose the vendor from the Received from drop-down menu.
- Enter the amount (This will be the actual amount of the wire transfer).
- In the second line, enter the bank charges as a negative item.
- Click Save and Close.
Once done, the actual amount credited will be recorded in the bank account.
Please let me know if you have any additional questions. Thanks.
While this method makes the account balance, when it comes time to prepare 1099's it makes it appear like the vendor was paid twice. (While my situation was different numbers, using this example, it appears like the vendor received $2,000 instead of just $1,500). How do I prevent this from happening?
Welcome to the Community, @Erica11.
I’m happy to help you with how preventing the balance showing that it was paid twice. You can make Journal Entries to zero out that balance.
- Select the + New button.
- Click Journal Entry.
- Fill out the fields to create your journal entry.
- Pick Save and new or Save and close.
If you have any other questions, feel free to reach back out to me.