Tracking check our company bounced.

Try this:

1. Set up a new bank account. Call it "Clearing."

2. Use a journal entry to record the bounced check being re-deposited (debited) to the original checking account. Credit the Clearing account. You can also record bank service charges for the overdraft on the journal entry.

3. When the money is actually withdrawn on the check re-run, create a journal entry that debits the Clearing account and credits the original checking account.

The clearing account should now reflect a balance of zero (assuming the two entries described above are the only entries to the account), and the funds should be deducted from the original checking account.

If you are unfamiliar with journal entries you can:

Make a Deposit to the Checking Account,  the From Account would be the Clearing Account.  Make notes in the memo file (ie., bounced check #1234).

When the check clears you can Write a Check, (resubmit#1234 as the chk no.) using the Clearing account as the expense account.  Record the fees with a separate Write Check expensing the amount to bank fees.

Thank you - this works well.  However, what do I do if I write a replacement check instead of the vendor re-submitting the original for payment?