What is the Journal Entry for a Returned Check We Issued?

by Salam
(Qatar)

Q: Dear Sir,

Can you please explain what will be the journal entry when a check we issued is returned by the bank and when they reproduce it?

A: The journal entry would be the exact opposite of the entry the bookkeeper made when issuing the check in the first place.

For example, if the original entry was:
Dr Creditors (liability)
Cr Bank

This means we issued a check to pay off one of our creditors.

...then the entry when the check was returned will be:
Dr Bank
Cr Creditors

This means we owe the creditor again and the bank account entry is reversed so our bank account is back to where it was before.

When you re-issue the check you simply redo the original journal entry.

Hope that makes sense!

Best,
Michael Celender
Accounting Basics for Students

P.S. See further below for more comments and questions as well as a full question about a returned check from a debtor...

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What are the Entries for a Returned Check from a Debtor?

by Mary
(Ghana)

Q: What are the entries for a debtor's returned check?

A:The entries are the opposite of what you did when you received the check.

When you received the check from the debtor, you should have recorded:

DR Bank
CR Debtor (asset)

Remember, a debtor is someone who owes your business.

The debit to bank means more money for your business and the credit to debtor means less debtors - less money owed to your business.

Now, when you discover that the check has bounced or is bad for some other reason, you should reverse what you did originally.

The journal entry would be:

DR Debtor (asset)
CR Bank

What you are showing now is that the debtor owes you the money again (debit debtor to increase it) and your bank account is back to where it was before (it's less because you didn't actually received the funds in the account in the first place).

Hope that makes sense!

Best,
Michael Celender

Related questions, exercises and tutorials:

• What is the Journal Entry for a Cheque Received?
• Tutorial on the Journal Entry for Income on Credit (Record a Debtor)
• Tutorial on the Journal Entry for a Debtor Paying
• Basic Journal Entries Exercise
• Journal Entry Exercise

Click here for more Basic Accounting Questions and Answers

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