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How to Enter Non-Sufficient Funds in QuickBooks?

When your bank account doesn’t have enough cash to cover the check’s amount or has non-sufficient funds (NSF), the check […]

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When your bank account doesn’t have enough cash to cover the check’s amount or has non-sufficient funds (NSF), the check will bounce. In this scenario, your bank imposes a bank fee or an NSF. How you control the fees goes on to show your approach to accounting.

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If a check does come back NSF, QuickBooks has a Bounced Check tab on the record of every previous transaction. So, you can just click that button. On a new invoice, the fee to your bank and the fee to the consumer are combined.

In this article, we are going to delve into the methods for entering non-sufficient funds in QuickBooks.

How to Enter Non-Sufficient Funds in QuickBooks?

Tracking the NSF Check

To keep track of the NSF check, you have to adhere to the following steps:

Step 1: Go to the QuickBooks home page and click the “Receive Payments” icon.

Step 2: To discover the transaction related to the bounced check, click “Previous” a few times.

Step 3: Select “Bounced Check” from the menu. In the text box labeled “Bank Fee Charged to You,” enter the sum your bank charged you for the returned check.

Step 4: If you want to administer your service charge to the customer, choose the “Charge Customer for Fee” option, and then enter the payment you want to charge. Next, You click on “Save and Close“. You add together the bank’s fee to you and your fee to the client. QuickBooks generates an invoice for the whole amount.

What Are the Steps for Invoice Workaround?

If you plan on working around the invoicing, then you should abide by the steps mentioned below:

Step 1: From the Lists menu in QuickBooks, choose “Item List.” Select “New” under “Items” from the drop-down menu. The purpose of this empty item is to track the bounced check.

Step 2: Choose “Other Charge,” then give it the label “Bounced Check.” Select “None” from the Tax Code menu and leave the “Amount” column blank. Click “Next” after choosing your bank account from the “Account” tab.

Step 3: To create a second Other Charge item called “Bad Check Charge,” follow the same procedure as before. This item is used to monitor the cost of your bounced check. Set the Tax Code to “None” and leave the Amount blank. In the Account section, choose “NSF Charge” as your income account. Click “OK” after creating an account if you don’t already have one.

Step 4: From the Customers menu, choose “Customer Center.” Select the customer whose check bounced by clicking the “Customers & Jobs” tab. Choose “Create Invoices” by performing a right-click on the customer’s name.

Step 5: Use the NSF check’s amount on the first line of the invoice’s “Bounced Check” item. You will notice that the books are balanced as a result of the corresponding decrease in your bank balance.

Step 6: Enter the value of the bank fee you were charged under the “Bad Check Charge” item on the second line of the invoice. Publish the invoice.

Now various scenarios might occur as a result of the check bouncing. These have been covered below.

What Are the Various Scenarios Associated with Check Bouncing and Methods to Solve it?

The different scenarios and methods to tackle check bouncing have been highlighted below.

Case 1: Bank Covered the Bounced Check and Assessed You a Fee

If this happens, then you should follow the steps below:

Step 1: Choose + New.

Step 2: Choose Expense.

Step 3: Go to the drop-down menu for Payee:

  • If the bank charged the vendor, choose them.
  • If your account was charged, choose the bank.

Step 4: Choose the account you use to pay expenditures from the Payment account dropdown menu.

Step 5: Put “NSF fee” in the field for the reference number to set it apart from other costs.

Step 6: Choose Bank Charges from the Category column.

Step 7: Enter the sum that was charged to your account.

Step 8: Choose Save.

Case 2: The Vendor Returned the Check without Depositing It after Your Check Bounced and Your Bank Refused to Pay for It

In this scenario, you should stick to the steps highlighted below.

Step 1: Click Get paid & pay, then choose Vendors (Take me there).

Step 2: Choose the vendor you paid.

Step 3: Locate the bounced check, then choose it.

Step 4: From the pop-up menu, click More, then Void.

Step 5: Select OK after making sure you want to cancel the check.

Case 3: Your Bank Refused to Reimburse the Returned Check, And the Vendor Keeps Re-Depositing It

As a result, there are several check bounces, reversals, and bank costs associated with the check.

Probability 1: Bank Keeps Track of Every Bounce and Reversals

1st Step: Reverse the Payment from the Bounced Check by making a Journal Entry.

  • Choose + New.
  • Choosing Journal Entry
  • In the Journal Date column, type the day the check bounced.
  • Choose the bank account on the first line from the Account column’s dropdown menu.
  • In the Debits column, enter the check’s amount.
  • Choose Accounts Payable from the dropdown menu in the Account column on the second line. The amount of the check appears.
  • Pick the vendor from the Name column.
  • Enter a note explaining the motivation behind the journal entry in the Memo area.
  • Choose Save.

2nd Step: Reopen the Invoice and Connect the Failed Check to the Entry in the Journal.

  • Click Get paid & pay, then choose Vendors (Take me there).
  • Look up and choose the vendor’s name.
  • Find the bounced check in the Transaction List and click on it.
  • Select the Journal Entry checkbox after clearing the one for the bill.
  • Select Save after making sure you want to make the changes.

3rd Step: Take Note of the Bank Fee.

  • Choose + New.
  • Choose Expense.
  • Go to the drop-down menu for Payee:
  • If the bank charged the merchant, choose them.

If your account was charged, choose the bank.

Choose the account you use to pay expenditures from the Payment account dropdown menu.

  • Put “NSF fee” in the field for the reference number to set it apart from other costs.
  • Choose Bank Charges from the Category column.
  • Enter the sum that was charged to your account.
  • Choose Save.

4th Step: For Every Bounce, You have to Repeat steps 1 to 3.

When you have enough money in your bank account to cover the check payment, you should record the bill payment.

Probability 2: The Bank Keeps Track of Successful Payments Only

1st Step: Put the day the payment was processed in place of the payment date.

  • Click Get paid & pay, then choose Vendors (Take me there).
  • Look up and choose the vendor’s name.
  • Find the bounced check in the Transaction List and click on it.
  • Modify the due date.
  • Select Save after making sure you want to make the changes.

2nd Step: Follow Step 3 of the previous section (Probability 1)

Hopefully, the article has cleared up all your doubts related to entering non-sufficient funds in QuickBooks. We have covered all the possible scenarios that may crop up and have showcased the steps.

However, if this still looks perplexing to you, it is wise to get in touch with an experienced QuickBooks professional who would guide you through every step.

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Frequently Asked Questions (Faqs)

How to Handle QuickBooks Desktop for Mac Systems?

To operate the QuickBooks Desktop for entering NSF, you should:

• Select Receive Payment from the Customers menu.
• Locate the check, open it, and then choose Bounced Check.
• Provide all required information. Keep in mind that if you don’t already have one, QuickBooks will create one for bank fees.
• Choose Next. What occurs with the invoice, check, and bank fees will be briefly explained.
• Choose Record. The bill is currently outstanding and unpaid. You will find a Bounced Check Charge for your customer. QuickBooks generates a Returned Check Charges income account for the charge if you don’t already have one.

How Can You Manually Record Bounced Checks?

To manually record bounced checks, follow the steps below.

• You have to create an income account, following which you have to create a Bad Check Charge item. Next, you have type Other Charge
• Choose ‘Make General Journal Entries‘ from the ‘Company Menu‘. Then you have to debit the account receivables for the NSF check. After entering a note in the Memo, choose the name of the job and customer and credit the bank account or checking. Finally, select ‘Save & Close‘.
• Choose Customers Receivables, then Customer Balance Detail, from the Reports menu. Double-click the NSF transaction’s initial payment line. Move the checkmark from the invoice to the reversal journal entry in the Receive Payments window. Select the Save & Close option.
• You have to resend the open invoice

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