How to reconcile company bounced checks & NSF charge?

Posted by Peter Bogiatzidis on February 12, 2009, 1:26 am

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Hello,

After searching for info on this topic, all that I could find out was how
this pertains to a customer bounced check. That's not the case here. Due to
checks that were deposited to the account not clearing in time (2 days as I
understand it), a couple of company checks bounced. Ultimately, the company
checks were redeposited by the payee at his bank and show up as cleared on
the following month's statement.

On the previous month's statement there's a discrepancy in the amount of the
two checks and the related overdraft charges. Basically, they cancel each
other out. The "Overdraft Fee" for both checks appears as a single debit
(negative number), which, I believe, should get treated as a check (debit)
and the checks that are listed as "Returned Check Credit" each get treated
as deposits (credits). How do you go about entering these items in order to
reconcile the account with the statement? Will the fact that the checks
cleared on the following month's statement have any bearing on it?

Any help would be greatly appreciated. Thanks in advance to those who post a
reply here.

Peter.

Posted by Golden California Girls on February 12, 2009, 2:09 am

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Peter Bogiatzidis wrote:

> Hello,

> After searching for info on this topic, all that I could find out was how

> this pertains to a customer bounced check. That's not the case here. Due to

> checks that were deposited to the account not clearing in time (2 days as I

> understand it), a couple of company checks bounced. Ultimately, the company

> checks were redeposited by the payee at his bank and show up as cleared on

> the following month's statement.

> On the previous month's statement there's a discrepancy in the amount of the

> two checks and the related overdraft charges. Basically, they cancel each

> other out. The "Overdraft Fee" for both checks appears as a single debit

> (negative number), which, I believe, should get treated as a check (debit)

> and the checks that are listed as "Returned Check Credit" each get treated

> as deposits (credits). How do you go about entering these items in order to

> reconcile the account with the statement? Will the fact that the checks

> cleared on the following month's statement have any bearing on it?

> Any help would be greatly appreciated. Thanks in advance to those who post a

> reply here.

> Peter.

If they didn't clear in month A they should not have been marked cleared in the
month A reconciliation.

You have the bounce charges right.

If this happened so close to the end of the month the bank showed them cleared
in A, then the reversing entries will be on the month B statement. Enter and
clear in month B.

Posted by Peter Bogiatzidis on February 12, 2009, 8:04 am

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Thanks for your reply.

To clarify, the two checks that bounced didn't clear in month "A". Each one
shows up as a "Returned Check Credit" in the section of the statement where
they list all deposits, service charges, and withdrawals, such as payment
made online by check. In month "B" when the checks actually cleared, they
show up in the section with all other checks.

The question is how to treat these "Returned Check Credit" items that, as I
stated, appear to be credits. How are these properly entered? The "Overdraft
Fee" can be entered as an unnumbered check. At least that's my take on it.

Thanks again, Peter.

> Peter Bogiatzidis wrote:

>> Hello,

>> After searching for info on this topic, all that I could find out was how

>> this pertains to a customer bounced check. That's not the case here. Due

>> to

>> checks that were deposited to the account not clearing in time (2 days as

>> I

>> understand it), a couple of company checks bounced. Ultimately, the

>> company

>> checks were redeposited by the payee at his bank and show up as cleared

>> on

>> the following month's statement.

>> On the previous month's statement there's a discrepancy in the amount of

>> the

>> two checks and the related overdraft charges. Basically, they cancel each

>> other out. The "Overdraft Fee" for both checks appears as a single debit

>> (negative number), which, I believe, should get treated as a check

>> (debit)

>> and the checks that are listed as "Returned Check Credit" each get

>> treated

>> as deposits (credits). How do you go about entering these items in order

>> to

>> reconcile the account with the statement? Will the fact that the checks

>> cleared on the following month's statement have any bearing on it?

>> Any help would be greatly appreciated. Thanks in advance to those who

>> post a

>> reply here.

>> Peter.

> If they didn't clear in month A they should not have been marked cleared

> in the

> month A reconciliation.

> You have the bounce charges right.

> If this happened so close to the end of the month the bank showed them

> cleared

> in A, then the reversing entries will be on the month B statement. Enter

> and

> clear in month B.

Posted by Haskel LaPort on February 12, 2009, 9:41 am

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> Hello,

> After searching for info on this topic, all that I could find out was how

> this pertains to a customer bounced check. That's not the case here. Due

> to checks that were deposited to the account not clearing in time (2 days

> as I understand it), a couple of company checks bounced. Ultimately, the

> company checks were redeposited by the payee at his bank and show up as

> cleared on the following month's statement.

> On the previous month's statement there's a discrepancy in the amount of

> the two checks and the related overdraft charges. Basically, they cancel

> each other out. The "Overdraft Fee" for both checks appears as a single

> debit (negative number), which, I believe, should get treated as a check

> (debit) and the checks that are listed as "Returned Check Credit" each get

> treated as deposits (credits). How do you go about entering these items in

> order to reconcile the account with the statement? Will the fact that the

> checks cleared on the following month's statement have any bearing on it?

> Any help would be greatly appreciated. Thanks in advance to those who post

> a reply here.

> Peter.

In the first month do not clear the checks or record the returned check
credit. Do however record the Overdraft fee. On the back statement make some
notation that the transactions cancel each other out.

Posted by Peter Bogiatzidis on February 16, 2009, 10:39 am

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The problem has been solved.

Thanks to Golden California Girls and Haskel LaPort.

As mentioned, I was on the right track with regard to the Overdraft Fee and
just entered it as an unnumbered check. Then, upon closer inspection, I
noticed that somehow I had checked the bounced checks as having cleared.
Once I unchecked those entries, everything balanced. No entry was needed for
the Returned Check Credit items.

Again, thank you for your help.

Peter.

>> Hello,

>> After searching for info on this topic, all that I could find out was how

>> this pertains to a customer bounced check. That's not the case here. Due

>> to checks that were deposited to the account not clearing in time (2 days

>> as I understand it), a couple of company checks bounced. Ultimately, the

>> company checks were redeposited by the payee at his bank and show up as

>> cleared on the following month's statement.

>> On the previous month's statement there's a discrepancy in the amount of

>> the two checks and the related overdraft charges. Basically, they cancel

>> each other out. The "Overdraft Fee" for both checks appears as a single

>> debit (negative number), which, I believe, should get treated as a check

>> (debit) and the checks that are listed as "Returned Check Credit" each

>> get treated as deposits (credits). How do you go about entering these

>> items in order to reconcile the account with the statement? Will the fact

>> that the checks cleared on the following month's statement have any

>> bearing on it?

>> Any help would be greatly appreciated. Thanks in advance to those who

>> post a reply here.

>> Peter.

> In the first month do not clear the checks or record the returned check

> credit. Do however record the Overdraft fee. On the back statement make

> some notation that the transactions cancel each other out.