I have migrated a set of accounts over to Solar. I now have been told by the bank that one of my customers' cheques has bounced and will not be represented.

In the accounts at the end of last year that customer's outstanding balance shows as zero (after I had paid in the cheque but before it bounced) and I have therefore not carried any of his details or transactions over to Solar.

What is the best way of dealing with this?

I don't really want to have figures in the 'Accounts Receivable' account that differ between the two different accounts packages, bearing in mind that i have closed the last financial year when I stopped using the other software.

Hi Stuart,

I think the simplest solution in your case would be to create a new invoice dated when the cheque bounced. The Account on the invoice should be 'Cheque Account' and the VAT Treatment should be 'Out of Scope'. If you receive another cheque record an invoice payment in the usual way. If you don't receive any payment you can write off debt as described here:
http://www.solaraccounts.co.uk/help/how-to-write-off-a-bad-debt.php

Please note that I am not an expert on this topic - I recommend you check the above approach with your accountant.

Regards,

I would suggest:

General Transaction

Journal memo: Unpaid cheque from Joe Customer not represented

From Account: Bank Account
To Account Bad debts expense
Amount £(value of bounced cheque)

Thanks for the prompt replies.

Hopefully I can get the customer to pay me in cash installments.

What is the best way to make an entry in the bank account to explain the unpaid (bounced) cheque amount now showing?

Hi Stuart,

If you are still hoping to receive payment then I think the best approach is to record the invoice with the Account set to 'Cheque Account' as described previously. You can set the Journal Memo to 'Bounced Cheque' to make it clear why the transaction exists. Later, you can then record several invoice payments allocated to this invoice.

Regards,

Thanks Mark.

That all makes sense but what would be the best way to show the transaction of the cheque being unpaid in my bank activity so that my bank account will reconcile - as money paid out, or a general transaction?

I originally paid the cheque in last year but it bounced this year.

Hi Stuart,

If you set the Account on the invoice to 'Cheque Account', then you will find that the invoice appears as a withdrawal in the Bank Reconciliation window when you reconcile your cheque account. You can then reconcile it like any other transaction.

Regards,

Reading from the facts..... a suggested way of recording this is to reverse the original posting in the books.

The original posting according to bookkeeping principles would have been:

Dr Bank Account and Cr Customer Account.

and to reverse it would look like this:

Dr Customer Account Cr Bank Account.

In solar accounts you can do this....create New Transaction...give the Journal Memo as 'Returned cheque from customer'....From Account: Cheque/Bank Account, To Account: Account Recievable/Trade Debtors.

The Custormer's account would now show a debit...any payment recieved would clear that debit.

You accountant will deal with FRS 21 Events After the Balance Sheet Date.

Hope that answers the question....