October 30, 2016 admin

Accounts Receivable—Returned Checks

Assets

ACCOUNTS RECEIVABLE—RETURNED CHECKS	ASSET ACCOUNT
	1125

ACCOUNT EXPLANATION
TRANSACTIONS
COMMENTS

ACCOUNT EXPLANATION

Customer checks returned by bank as uncollectible; includes insufficient funds and account closed situations.

TRANSACTIONS

					Jrnl.	Dr.	Cr.

	Returned check from customer accounts receivable				G
		Accounts Receivable – Returned Checks				1125
			Cash in Bank—General				1001

	Payment received from customers				CR
		Cash in Bank—General				1001
			Accounts Receivable – Returned Checks				1125

COMMENTS

Subsidiary records should support this account.
At month end, an aging schedule should be prepared for management review.
See Account 1110, Accounts Receivable—Vehicles for method of aging individual receivables.
Amounts not collectable at month end should be reserved in Account 1290, Allowance for Doubtful Receivables.
Before uncollectible accounts are written off, proper management authorization should be obtained.