How To Record a Returned Check in QuickBooks

What Does a Returned Check Mean?

A returned check is a check that you receive from your customer that is directly returned by their bank. This kind of situation commonly happens when your bank account doesn’t have enough funds to pay off the check amount. A returned check is popularly known as the ‘Bounced’ check in the world of accounting. 

Generally, a bounced check requires immediate action as it will spoil your market goodwill. Along with that, you need to make several adjustments in your books of record about the bounced check. 

Bounced/Returned Check in QuickBooks

It is important to make adjustments in your QuickBooks account when a check bounces. In QuickBooks, the balance will shown overstated as it treats the ‘check’ amount as deposits. So, you need to enter the accurate bank balance so that your QuickBooks account balance and your bank balance will correctly match up. 

Also, you need to pay off the amount to the customer from which the check is returned. Additionally, you need to pay the interest charges that are levied by the bank of the customer. Recording a returned check in QuickBooks is a complex process and requires additional steps. As QuickBooks doesn’t provide the feature of recording a returned check, you have to do it manually.

Also Read: QuickBooks Unscheduled Payroll and Method to Create it

Steps to Record a Returned Check in QuickBooks

Below are the steps that help the users to record a returned check in QuickBooks:

  • First, you need to record the reduced amount in your bank balance.
  • For doing this, go to the ‘New’ button in the top-left menu bar.
  • You will see the ‘Vendors’ drop-down.
  • Under the drop-down, click on the ‘Expense’ option.
  • The expense entry has increased the Account Receivables and reduced the bank balance. 

Also Read: Add a Bank Account in QuickBooks

You will see the following details:

  • Payee: The customer whose check is returned.
  • Payment account: Bank account from where the check is returned.
  • Payment date: Date when the bank notified you about the returned check.
  • Amount: Amount of the returned check.
  • Payment method: Cash as the payment method.
  • After that, click on the ‘Save and Close’ button.

Note:- Remember, do not delete the Entry of the original invoice. This will lead to problems in Reconciling your bank account balance with your QuickBooks account balance. 

  • Now, open the original invoice.
  • Mark the invoice as ‘Returned or Bounced’ and send it back to the customer.
  • Go to the ‘Sales’ option in the top-left menu bar.
  • Move to the ‘Customers’ tab.
  • Scroll to the bottom to look for the customer whose check has been returned.
  • After you find that customer, click on their name.
  • This will open the list of transactions of that customer.
  • From the list of the customer’s transactions, move the original invoice and payment that is originally received.
  • You will notice that the paid check transactions are marked ‘Paid’ in the green option.
  • The returned check transaction is marked as ‘Closed’ in green color.
  • Click on the ‘Closed’ option and this will open the details of this particular transaction.
  • After that, you need to re-open the invoice.

Also Read: How to Void a Check in QuickBooks Online?

  • For doing this, un-checkmark the box that is located on the left-hand side of the invoice.
  • On the other hand, check-mark the box to the left of the check that was made first.
  • Click on the ‘Save and Close’ green-colored button.
  • Now, you need to record the NSF (Non-Sufficient Funds) fee that is charged by the bank.
  • To record this fee, you need to create a ‘Service Item’ that will mark and bill the fee accurately.
  • Go to the ‘Sales’ tab from the left menu bar.
  • Select the ‘Products and Services’ option.
  • In the window of products and services, click on the ‘New’ button display as in the green-colored option.
  • Enter the information about Products and Services.
  • After that, click on the ‘New’ option.
  • In the first column of ‘Customers’, select the ‘Invoice’ option.
  • This will open a new invoice screen.
  • In the ‘Billable Expense’, Click on the ‘Add’ option.
  • Enter the NSF fee amount and details.
  • Click on the ‘Save and Send’ option.

In Conclusion:

The above article is based on the details of recording a returned check in QuickBooks. If the above solutions are not working out for you, reach out to the QuickBooks Customer Service experts via chat on our Website.

Read more Related Articles:-

QuickBooks Tool Hub
Procedure for QuickBooks Credit card Processing
QuickBooks Banking Error 101
QuickBooks Error 3371 Status Code 11118

✆ Call Now: +1(860) 544-6044