Bounced cheque

[skoo]

Hi,

I'm the treasurer of a dog training club. We recently banked a deposit that included both cheques and cash, distributed over a few accounts (new memberships, renewals, weekly fees etc). We've always rolled these up into a single weekly transaction which is recorded as a cash deposit.

However, recently just one of the cheques in a deposit was returned. On our bank statement we have two separate transactions, a credit for the initial deposit and another smaller debit for the returned cheque. How do I account for this in AccountRight?

Thanks,

Sherlyn

[RienaP]

Hi @skoo,

The best way to deal with a bounced cheque is to reverse out the payment of the transaction, which will create a transaction in the bank account for that and then you can process another payment when required.

Firstly to do this go to Setup>>Preferences>>Security tab>>Tick "Transactions can't be changed they must be reversed". Once that preference has been enabled to select the transaction, in this case, the Recieve Payments. When that has been on the screen you would go to Edit>>Reverse Transaction, adjust the date if required and record the reversal. 

By doing this it will make the invoice still open i.e. awaiting payment and you will have the necessary transactions in your bank account to match what has occurred for reconciliation purposes.

Help Article:  Dishonoured (Bounced) customer cheques has more information into that process.

If you have any further questions/queries please do not hesitate to let us know. 

[skoo]

Hi @RienaP,

Thanks for the info. I'll have a look at this tonight. So I should reverse the initial transaction and then create another transaction for the original amount minus the $10 that bounced? On our bank statement we have a deposit for $324 and then a debit for $10 the next day. We don't really do invoices or separate membership payments out by member.

Regards,

Sherlyn

[RienaP · Accepted solution]

Hi @skoo,

Thanks for coming back to us. I was wondering if you had managed to review the notes.  As per your feedback, since you don't write invoices, you would have written Receive Money and grouped in Undeposited Funds account. Once a week you Prepare a Bank Deposit from Banking and group the payment. 

From Transaction Journal >>Reveipts >> Enter the correct date >>Locate the transaction >>Edit >>Reverse Transaction >>Refresh your Journal and you will see the reversed transaction separately. 

From Banking command centre >>Prepare Bank Deposit >>locate the reversed transaction and there should be a negative transaction which will be a withdrawal in your bank statement. 

Hope this helps! Let us know how you go. 

[skoo]

Hi Reina,

Sorry, I haven't had a chance to give it a go yet, but hopefully I'll be able to have a look tonight.

We don't use Undeposited Funds - I just create a cash deposit to our Cheque account with the payment details (there may be a more correct way to do this but this is how I was shown, honestly!)

Thanks for your help - I'll report back later.

Regards,

Sherlyn

[skoo]

Hi @RienaP,

I ended up performing the reversal as described, then unticking the setting again and editing the reversal transaction to be only $10, and not for the full amount of the deposit. It looks okay to me but hopefully it's not violating any of the principles of accounting or anything!

Thanks again for your help -

Sherlyn

[IanChait]

Hi @skoo @RienaP

Your method works, but I like to keep things simple. Firstly, I would not delete and change the original deposit as then it does not agree with the Bank Statement. Will the money get paid? If so, I post the dishonoured amount to a Suspense account, and then when the replacement payment is banked, I post that also to the Supspense account.

[skoo]

Thanks for the tip, @IanChait. But I might just leave it... I'm not an accountant so your way sounds more complicated to me! And I'm not sure if we're going to chase up proper payment for that renewal, or let it go on goodwill.

Cheers,

Sherlyn