How to Book Returned Checks

How to Book Returned

And Postdated Checks

To avoid mispostings-and liability for another employee's misdeeds-follow these simple steps:

Returned checks.When the bank notifies you that it is returning a customer's check for NSF (not sufficient funds), debit the customer's account immediately-even if you plan to redeposit the check the same day. For good internal controls, instruct your bank to address all returned checks to someone other than you-possibly the owner or a senior manager. This can protect you if an employee tries to use fictitious checks to cover temporary shortages.

Postdated checks. If a customer gives you postdated checks, treat them as a note receivable. In other words, debit it to Notes Receivable, not to Cash. On the date written on the check, deposit it to your firm's account, debiting Cash and crediting Notes Receivable.

What to do with paycheck

Returned in the mail, or not picked up.

Employers holding unclaimed wages must report certain information to the state while they hold the funds. The report must be filed annually and display the following information:

• Employee's name,
• Last known address,
• Description of the abandoned property ("wages"),
• The date the wages became payable,
• The dollar amount involved, and
• The date of the last transaction with the employee.

Employers must make a "reasonable effort" to contact the employee to prevent wages from being abandoned and remain liable for unclaimed wages until paid or turned over to the state. Attempts to keep or spend unclaimed wages will result in penalties and interest.