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QuickBooks 2013 For Dummies by Stephen L. Nelson, MBA, CPA

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Handling NSF Checks from Customers

I’ve had a handful of reader questions about how to handle insufficient-funds (NSF) check transactions. Here’s how I suggest handling this situation:

1. Record the service charge that the bank charges you for handling the bounced check, just like any other bank service charge.

You can enter a transaction directly into the register, for example. Or you can even record the bank service fee as though it’s a check that you just wrote. Anything coming out of your account is entered just like a check. (Refer to the earlier discussions in this chapter for information on entering transactions in the register or on recording checks.)

2. Record the adjustment to your bank account balance because the customer’s check didn’t clear as a withdrawal or payment.

You can use a bad-debt expense account to categorize the expense of the bounced check if you’re on the accrual basis for taxes; otherwise, cash-basis companies should directly charge their sales income account to reduce their income.

3. (Optional) Try to collect on the check again.

Try running by the customer’s bank. You might also try to assess the customer a bounced-check fee. (See Chapter 4 for information on invoicing customers.) But be honest: You’re probably not going to be able to collect, are you? So write a Note in the Customer’s master file that says not to take any checks. It will appear right in the middle of the Customer Center screen when you select that customer to record the next ...

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