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Handling NSF and voided checks.

Q. I received a notice from the bank that a customer's check has been returned. What is the best way to handle it?

A. Unfortunately, as a part of doing business, occasionally you may receive an NSF check from one of your customers. You need to take the money out of your checking account and also put it back on the customer's account to show that they still owe you. The best way I've found to handle it is to:

1. Create an 'Other Charge' Item called "Bounced Check or NSF". In the description field I usually say something like, "Your check # has been returned, please remit replacement payment immediately." For the Account enter your checking account number.

2. Now, invoice the customer for the Item 'Bounced Check' and enter in the check #, invoice # and other information about the check. This takes the money out of your checking account and puts it back on the customer A/R.

3. I usually also create an "Other Charge" Item called "NSF Fee" and charge my customer for any service charge I received from my bank. You can put this to your account for 'Bank Service Charges' to offset what your bank charged you or to a 'Misc. Income' account.

4. When the customer sends a replacement check, Receive Payment as usual and make your deposit.

What you don't want to do is to delete the returned check from the original deposit. You did deposit the check and that can't be changed. The above instructions allow you to keep your original deposit intact, subtract the amount of the returned check from your checking account, and record the business/person that owes you for the returned check.

Q. I need to void a check and I'm not sure which way is best. What do you suggest?

A. There are actually three different ways you can void a check. Each one is handled just a little differently.

1. You've just printed a check, realized it's wrong and need to void it. Highlight the check either from the Check Register or in Write Checks. From the Menu, Edit, then Void Check/Transaction (you can also right-click anywhere on the check and select Void Check/ Transaction). This voids the check and changes your bank balance since that date (not recommended if the check was written in a previous month). If this check was a 'Bill-Payment' it will put the Bill back into Accounts Payable. You can then either pay it or, if the bill was in error, you can go to the bill and void it. Many times people make the mistake of voiding the check and forgetting about the bill.

2. You've just printed a report on the check and you'll never be able to actually use that check number. (My favorite!) You'd think I'd know better, but I am frequently putting checks in my printer and forgetting to take any extra, unused checks out of the paper tray before I start printing checks.

On a blank line in the Check Register (Click on the Icon for Accts and then double-dick on your checking account): Enter in today's date--Enter the check #--For the payee enter VOID CHECK (I create this as an Other Name)--Skip the amount fields--In the account, enter Void Check (I create an Other Expense type account).

This records the check number with no amount. Now when I run the Missing Checks Report (found under Reports--Banking) all of my checks are listed and I don't waste any time looking for the missing check numbers.

3. You wrote the check a while ago and it's lost and you need to replace it or just void it. In the Check Register, go to the first blank line. (Click on the Icon for Accts and then double-click on your checking account)--Use today's date--Use the original check number as a Reference number--Use the original Vendor's name in the Payee field--Enter the amount of the check as a DEPOSIT--Enter the account the original check was posted to (this reverses the check). If you need to re-issue a check, follow normal procedures. The next time you reconcile your checkbook, clear both the original check and the deposit.

Note: If you find this check in your check register and void it per example 1, it will change your bank balance from the date of the check to today. If this was your manual, handwritten check register, you would probably add in the voided check amount on the next available line. Then re-issue the check if need be. Be especially careful if this check was written in the previous year!

Send your questions on QuickBooks & Peachtree to Dawn Ashpole at sbaservices@attbi. com.

Since Dawn Ashpole started SBA Services, Inc., in 1989, she has provided training and support in all versions of QuickBooks, Peachtree and Red Wing Business Software to more than 1,500 small- to medium-size businesses. She may be reached at or 800-321-4744.
COPYRIGHT 2003 National Society of Public Accountants
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Title Annotation:Troubleshooting QuickBooks & Peachtree
Author:Ashpole, Dawn
Publication:The National Public Accountant
Geographic Code:1USA
Date:Aug 1, 2003
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