How to account for a bounced check from a client
If you have recorded a payment from a client and later the bank returns the payment for any reason, here are the instructions you'll need to account for this in AcctVantage.
This article makes a few assumptions:
- A customer's A/R payment was returned by the bank. (This commonly occurs due to insufficient funds in the customer's account.)
- Receipt has already been created and posted.
- Bank deposit has already been created.
- Optional: The bank is charging an NSF fee which you want to pass through to the customer.
Receipt and bank deposit example
In the below example you'll see a posted A/R Receipt. A batch deposit has also already been created to record this payment in the check register.
To correct the bounced check, you will need to create an Adjusting Entry.
Create an Adjusting Entry to reopen the A/R
Following the rules for different types of adjustments, create a new Adjusting Journal Entry.
- To reopen an A/R balance, add a "CLI" line and debit the amount. In this example, there were four invoices paid via the bounced check so we will add one "CLI" line for each invoice.
- To deduct the funds from your checking account, add a "GL" line and credit the amount.
When this entry is posted the system will reopen the A/R and there will be an entry in the check register which will offset the previous bank deposit.
Optionally, you can account for any bank fees too. How you enter the fee depends on whether you're going to pass the fee through to the customer or account for it as an expense.
- Charge bank fee to customer: Add another "CLI" line and debit the fee amount. This will create a new A/R balance just for the fee.
- Expense the bank fee: Add another "GL" line, enter your GL account for bank fees and debit the amount.
Whichever method you choose, don't forget to offset the fee with a credit for the same amount to keep the entry in balance.
