Handling an NSF returned check per the "Statement" method, you post the check amount to A/R. (PA Accountant 2009, Section 3, Module 3, Lesson 6). I used this method as we report sales tax.
But . . . now I have A/R showing up in cash basis balance sheet.
Am I missing something, or is this just the way it has to be?
Is there a better way?
You may be cash basis, but with an returned check you do have an AR -- as soon as you get payment for this you can apply the payment and it'll go away. Even as a cash basis you may have items like this that go into AR from time to time -- I have this with my retail clients too for NSF checks. I put them in AR, and then when they're paid it takes care of the AR. It's okay to have it this way.
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This is what thought. What would really help is for the customer to pay for the NSF check :)
