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Book returned and postdated checks.

December 23, 2011

To avoid mispostings and liability:

Returned checks. When the bank notifies you that it is returning a customer’s check for NSF (not sufficient funds):

  1. Even if you plan to redeposit the check the same day, debit the customer’s account immediately.
  2. Instruct your bank to address returned checks to someone other than you (the owner or a senior manager) to protect you if an employee tries to use fictitious checks to cover temporary shortages.

Postdated checks. If a customer gives you postdated checks:

  1. Treat them as a note receivable.
    1. Debit to Notes Receivable, not Cash.
    2. On the date written on the check, deposit it to your firm’s account, debiting Cash and crediting Notes Receivable.

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