because property management companies use QuickBooks a little bit differently
this means recording bounced checks are just a little bit different in this file
what should you do when a tenant bounces a check well you have to record the reduction of your bank
account on the same date that the bank recorded the reduction it has to be the same amount in
total that the bank deducted and when you're recording it you have to split the amount between
the amount of the bad check and the amount that the bank deducted from you because you know the
fee that the bank charged you because the tenant gave you a bad check that you deposit it into your
account and then of course you have to record that you actually earned a fee from the tenant
for your troubles and of course this will be more than the amount of the bank fee that you deducted
and you also have to record that the tenant owes you number three plus number four the tenant owes
you the total amount that they were supposed to the original check plus the fee that you earned
so these are the five Corrections you have to make into your records and you can do it all in
one shot so first you have to set up for this or set up for bounced checks in a management company
property management company by adding two accounts to the chart of accounts we're gonna add bad check
fees earned and that's an income account because you're charging more to the tenant then your bank
is charging you and you want to track the amount separately and you have to put receivable for
bad check fees in other words we're gonna put the money that's owed to us for bad checks in a
that bread receivables type of account and that will be separate from their normal rent balance
and that will be separate from their normal security deposit balance so let's take a look
how to put on these two accounts so from the main menu we click list chart of accounts and
then of course we already remember mean when week is lower we already remember from the bottom-left
account new the first one is an income type of account and we call it income from bed check fees
and then we click Save and new and the second one is an accounts receivable type of account
and we call it what do we call it receivable for bad check fees so we can just basically
call it receivable for bad check fees ok good save and close now all we have to do is after
we did these two things at a special bounce check receivable report to the icon bar well we already
know how to do that too we know that comes from the specific report customers and receivables
customer balance detail now what we would do is we would customize this report and we would
filter it by account and the particular account that we would filter it by would be this accounts
receivable account receivable for bad checks now when we click OK it's going to be empty because
right now we don't have anything receivable for bad checks but you should also maybe customize
the title of it and call it receivable for bad checks and when you save it into the icon bar by
clicking view add to the icon bar you could also call it receivable for bounced checks
okay there you go so this will show you a little messed up but it'll show you only the money that's
owed and specifically for bounced checks so now let's take a look at our example let's imagine on
June 1 we received and deposited three thousand dollars from candy for June's rent ten percent
is our fee and she gave us check number eight four seven two now we already know that this is candies
first payment and we already know how to record deposit from collections but we'll put the date
that we got the money it went into this bank account we received it specifically from candy
Charles with check number from star trek eight four seven two if you're a Janeway fan and the
account this time and is the normal account that we would normally do in other words this would
be the payout to the clients to landlord clients would only be two thousand seven hundred because
that's ninety percent and of course from candy we earned the income which is income from management
fees and that would be the other three hundred so we already knew how to record that and here's the
three thousand dollars that we physically received on joowon and we think everything's fine with this
check and we click Save and close now you may well notice that we now have a balance of twenty
seven hundred to remit back to the landlord of candy at the end of the month if we don't have
any expenses related to candy you will also notice in the trial balance the bank account if I double
click it has increased by the deposit on June one of three thousand so we think our records match
the bank however hahaha what will happen now is June fourth we receive a No vacation that as of
that day June 4th the bank account is decreased by three thousand and thirty dollars and you
say hey why did you decrease my bank account by three thousand thirty dollars and the answer is
there's a bank fee of $30 because your customer bounced the check on you and three thousand we
took out because we should have never put it in in the first place on June 1 because it was a
bad check so that's the explanation of the three thousand thirty dollars it should be noted that we
actually charge fifty five dollars to the tenants who do this to us who bounced a check on us as
well we should for our aggravation therefore the total that the tenant owes us is three thousand
fifty-five dollars so these are the numbers that happened in the situation and therefore these are
the numbers that we will put in when we make a general journal entry and it is very simple to
make a general journal entry and we will simply refer back to these numbers in the PowerPoint as
we record it what date should the general general journal entry be the date that the bank decreased
the account because that is also the date that we earned this fifty five dollars that the tenant
will pay later as a fee for the bounced check so it's very simple we click company make general
journal entry and we put the date that the bank put when the bank reduced the account June fourth
okay now I'm wondering if I could maybe make this look nicer I want to see more I guess it's
what does it collapse this there we go okay good now obviously the bank account has decreased by
three thousand thirty dollars so you have to put a credit to the bank account by the amount the abet
bank decreased it so that it matches the bank so that handles this here on the this 3030 now what
about the fact that three thousand was the bad check and thirty dollars was the fee well let's
just record the fee for a moment expenses are always debited when you incur them so we will
come here for the bank fees and because I forgot to put it on the list before this video I'm just
gonna put this expense called bank fees thank you for waiting while I put it in the chart of account
but the bank fees will only be the thirty dollars of the fee that they charged now stay with the
story because even though it we know we have to split it between three thousand and thirty as the
fee we should also charge the fifty five dollars that we earned even though we haven't received it
yet and if you record expenses as always a debit you have to record income as always a credit so
very simple we go on the credit side wipe this out because they're trying to help us they don't
know put fifty five dollars because that's the amount we earned in income from bad checks so
do we agree now that we earn fifty five dollars an income from bad checks we incurred thirty dollars
of bank fiea as an expense the bank account was decreased by the thirty three thousand thirty
so the remaining balancing amount by chance and coincidence is exactly the amount that the tenant
actually has to pay you because they have to pay you three thousand for the check and fifty five
for the fee so the amount that they owe you goes into this account receivable for bad check fees
receivable should really just say receivable for bad checks in general so this is how much
is owed to you because you earned 55 they bounced three thousand this will properly adjust the bank
account and this will record the banking and that's all you have to do so if here are the
numbers in the situation and you can pause the video and look and think about it then this is
the way you would put it in and this is a model example of how to do it now click Save and close
oh right in other words it's telling us you have to choose a customer with a receivable account and
in this case QuickBooks has to know that it's candy Charles specifically candy Charles that
will pay you for this receivable in the future save and close and take a look at the numbers
the trial balance indicates that specifically related to bad checks you are owed three thousand
fifty five dollars the bank account has been properly adjusted for the amount that the bank
adjusted it on the day the bank adjusted it and bank fees are increased by the amount that the
bank took out if we go to pay out to landlords this would not this affects her balance because
we didn't really adjust really we should go to this new receivable see it this receivable for
bad checks will show this this we have to fix we'll just fix this so it will not show the
bad check receivables the bad check receivables are here on a separate report just can do you
the three thousand fifty five dollars I'm gonna make a little correction here so that it would
not show up on the regular rent report it doesn't show up as rare as affecting what you would remit
although it might it might be in your arrangement with your landlord that you're not going to pay
your landlord if your tenant bounced the check so you might want to leave this here until they
finally repay now when they repay just choose the receivables account so June 9th for example
he was nice and she paid you three thousand fifty five dollars with cheque number whatever well
that's very simple you still click deposit you'll put June 9 the amount that came into your count
was three thousand fifty five and you received it from candy don't worry about that you received it
from candy but the account the specific account because this 3055 was related to bad checks you
put it here and then when you click Save and close when you look at the bad check report you see on
the one hand she owed it to you on the fourth but then on the ninth she paid it to you and she
owes nothing and that deposit increased the bank account and everything is right with the world