What is the journal entry for a bounced check.
For exemplar, on May 10, Mr. Smith pays his $1000 bill the a certain company, cash receipt #1. On May 12 the check is returned marked Not Sufficient Funds. Would the journal entry look like this.
debit credit
Accounts Receivable $1000
Cash $1000
Also, What source document would I use. Thanks for you helps.
Thanks!
To record a bounced check, you would need to make an adjustment to your journal entry. The correct journal entry in this case would be as follows:
Debit: Accounts Receivable ($1000)
Credit: Cash ($1000)
This entry records the amount owed by the customer as a reduction in accounts receivable and reflects the cash not received due to the bounced check.
As for the source document, you would typically use the original sales invoice or bill received from the certain company as the source document for recording the initial transaction. However, in this case, since the check bounced, you may also have a record of the returned check or a notification from your bank regarding the insufficient funds. This document can serve as additional evidence and should be kept for your records as well.