QuickBooks 2005: The Missing Manual

Handling Bounced Checks

Bouncing a check is annoying and embarrassing. And banks charge for each check you bounce (and, often, they craftily pay your larger checks before the smaller ones to rack up as many bounced check charges as possible). Besides depositing more money to cover the shortfall, and paying those bank fees (page 334), you must tell people to redeposit the ones that bounced or write new checks (page 335).

When someone pays your company with a rubber check, it's just as annoying. Besides the charges your bank might charge for re-depositing a bounced check, you have to do the following two things to straighten out your records in QuickBooks when a customer's check bounces:

• Record any charges that your bank levies on your account for your customer's bounced check.

• Invoice the customer to recover the original payment, your bounced check charges, and any additional charges you add for your trouble.

Setting Up QuickBooks to Handle Bounced Checks

Before you can re-invoice your customers, you must first create a couple of items (page 87) for bounced checks:

Bounced check item

When a check bounces, your bank removes the amount of the check from your bank balance. You want to do the same thing in your company file, so you don't overestimate your bank balance and write bad checks of your own. Because the customerhasn't really paid you, the amount of the check should go back into your Accounts Receivable account.

To remove the amount of the bounced check from your bank account, create ...