do customers sometimes give you a bad check well even though that's a bad experience it
won't be difficult to record the bounced check in quickbooks online if you have any questions about
this topic you can leave them in the comments section below and i'll do my best to help you
and of course if you feel the video helped you I hope you will click like and don't forget to
subscribe to get updates on new videos that come out all the time there are three things that need
correcting when the bank records a customer's bounced check first your bank account must be
decreased by the amount of the bounced check and this amount must be added to the customers balance
and accounts receivable because the customer now owes you the money for the bounced check
secondly you must record the fee that the bank charged you as a result of the bounced check and
you really should charge your customer a service fee for the service of managing this customer's
bounced check now these last two are very easy to do and if you're in this course you probably
already know how to do that but let's focus on this first step it only takes a minute to set
up in order to set up to be able to do step number one all you have to do is add an item to the items
list and connect it to the bank account let's call this item customers bounced NSF check so
here we are in QuickBooks Online and we're going to click the cogwheel and we're going across to
this list of products and services now we could of course click new and it could be either a service
or a non inventory part either of these types will work fine I like to choose non inventory
part so it's clear that it's not the normal service that we give and I believe the name will
be customers bounced NSF check now all we have to do is connect it to the actual bank account
we click Save and close and now you can see this item has been added to the items list now we'll do
an example let's imagine on April 1 we received a notice from the bank that checked number five
six seven eight from candy dated March 6th and deposited on March 9th has been returned as an
NSF check and the amount of the check is two thousand six hundred and sixty dollars they
charged you $30 for someone else's mistake and you should charge candy $50 just for dealing with this
now again these are the three steps that you have to take and let's focus on step number one your
bank account must be decreased by the amount of the bounced check and this amount must be added to
the customers balance in accounts receivable how do you do this well it's very simple all you have
to do is make an invoice for candy dated April 1 which is the day the bank deducted the amount
from the account and on this invoice use the item we just created customers bounced check this will
both correct the balances of the bank account and the customers receivable account while at
the same time it gives you an invoice that you can give to the customer and make it clear why
they have to pay let's go ahead and record this invoice for candy to do this you open the new
transaction menu either click on the top left where it says new or if you don't have that go
to the top right and click the plus sign close to the cogwheel either one will open the same choices
in the new transaction menu and we go across to invoice we make sure we have the right customer
candy and you have to put the date that the bank decreased the account because that's the moment
that the customer started owing you the money specifically for that bounced check and in our
little example it's april 1 of 2017 now all you have to do is choose the item that we just created
customers bounce NSF check it's not taxable so if your QuickBooks Online is having technical issues
like mine you just have to make sure that that's not checked at all and you have to put in the
amount that they owe you two six six zero that's the amount of the bounced check and that's the
amount that you are billing the customer for with this invoice by simply creating this invoice and
clicking Save and close your records will be fine don't worry about the invoice number okay now your
records are fine now when you click the reports for the trial balance you will be able to see
that cash and bank was decreased and the very last transaction on April 1 your bank records
are now decreasing the balance to match the bank on exactly the same day that the bank decreased
the account in their records you can also check the trial balance for accounts receivable to see
that accounts receivable just went up on April 1 for what you charged candy for that bounced
check in fact you can even go to the open invoice report and you can see that candy now owes you
an additional amount for that bounced check and that's how you handle step number one now let's
do step to record the fee that the bank charged your account as a result of the bounced check
that's very easy just use the checks window so we click the plus sign and we go over to the
checks window the date is still April 1 of 2017 that's the day the bank charged you the fee now
technically you're paying the bank so you have to find the bank on the list of payees you should
really have your bank on the list of vendors so that you can pay them or at least record giving
them some fee that they extracted from your bank and the expense account that relates to that will
be your bank fees expense account it's unlikely that you will have so many bounced checks that
you would need a separate expense in the chart of accounts to track how much money you're losing for
customers bounced checks usually it just goes in the bank fees expense account and make sure
that you're deducting the check or the at least this transaction from the correct bank account
with the correct payee and the amount that the bank charged you on that date was $30 this will
put $30 of expense in bank feeds and lower your cash and bank by the $30 when we click Save and
close we can look at the report that is the trial balance and you can see for the very first time
bank fees shows up as $30 and your bank account has just been reduced by $30 and now let's do
step 3 charging the customer a service fee for managing the bounced cheque well in order to do
this we can make another income account in the chart of accounts for other miscellaneous income
because it's not likely that you will have so many customers bounce checks that you will need
a separate income account to track the income of processing these checks this other income
account is already in the chart of accounts and you already know how to make it however the final
step to setup for charging your customers for a bounced check is to make an item on the items
list that represents what we will charge them as a fee let's go ahead and add that item and
connect it to the other income account we click the cogwheel and we go across to products and
services click new and again it's better to put it as a non inventory part so that you can remember
that this is not the normal service that you would put on an invoice and you type in fee for customer
NSF check so that the customer can see this name when it's on the invoice and know what they're
paying for now the income account you have to connect it to is the other income account and
if you don't already have an other income account meaning an income account that doesn't relate to
your normal services you can just go and add it to the chart of accounts the way we learned but
I already have it here by the way if you want to add it right now you can scroll all the way up and
click add new and you can add it but you already know how to do that you can pause the video go
ahead and add it let's click Save and close oh by the way in the new QuickBooks Online when we
in the new QuickBooks Online when you make a non inventory part make sure it says on taxable that
should be the default so you don't run into any problems so that's how you set up the item that
you're going to put on the invoice to charge the customer now all you have to do was click the plus
sign choose invoice make sure the date of the invoice is the date that they owe you the money
which is exactly the date that the bank recorded the bounced cheque in this case the invoice is
going to the customer who bounced the check on you and the item is fee for NSF customer check
I don't know why it's said taxable when we chose non-taxable don't worry just put the amount of
$50 now this last example is going to go very quickly and smoothly because we're already set
up and we already know what to do it's going to be the same bank fee of $30 and it's going to be
the same $50 fee to the customer to charge them to process but step one says April 2nd the bank
reduced the account by 6000 because Allen bounced the check on us and he bounced the February 26
check that was deposited on February 29th it will be so quick and easy because we are already set
up watch we click the plus sign and we go over to invoice and we choose Allen and we simply put the
date that the bank reduced the account and we can put on the body of the invoice first the customers
bounced check in the amount of the original check that bounced and on the next line in the very same
invoice we could charge them the fee for the customers bounced check don't let it be taxable
$50 and then we do that now the customer knows they have to pay us six thousand fifty dollars
six thousand for the original bounced check and $50 is what we're charging them because of the
bounced check and click Save and close so step one in step three were done at the same time now
all we have to do is record the fee click the plus sign click check again the date should be
the date that the bank deducted the fee from your account the customer is the same customer actually
no actually the payee is the bank excuse me this is a check so the payee is the bank that took the
check from your account and of course the expense account should be bank fees unless you really
have a lot of customers who bounce checks and you need a separate expense to track that that's very
rare and the amount is 30 dollars save and close congratulations recording a customer's bounced
check was that easy and all you have to do is print this invoice and mail it to the customer you