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How to Handle Returned Checks
CAUSE: After a business deposits a check to a bank, it may be returned to the business because the person/company that drafted the check did not have enough funds in their account to cover the check. The person/company still owes money to the business.
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When you get a returned check, you create a transfer from the deposit bank to the returned check bank.
You have the checks in hand to verify the amount that is in your returned check bank account.Once you receive the funds on the returned check you do a transfer from the returned check bank back to the deposit bank.
To handle the service charge, you just create a manual entry to the deposit bank and code it to the general ledger account for returned check fees.
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