Journal entries Updated November 2026

NSF check journal entry

When a customer's check bounces, debit Accounts Receivable and credit Cash for the check amount, which reinstates what the customer owes and removes the deposit the bank reversed. Record any NSF fee as Dr Bank Service Charges / Cr Cash, or add it to the receivable if you bill it to the customer.

Syntax

Dr Accounts Receivable [check amount] / Cr Cash [check amount]; fee: Dr Bank Service Charges [fee] / Cr Cash [fee]

Part	What it is
`Accounts Receivable`	Debit; the customer owes the money again
`Cash`	Credit; the bank took the deposit back
`NSF fee`	Expense, or added to the receivable when passed on

Examples

Customer check 480 returned NSF

Result: Dr Accounts Receivable 480 / Cr Cash 480

Customer check 480 returned NSF; bank fee 25 absorbed by the company

Result: Dr Accounts Receivable 480 / Cr Cash 480 and Dr Bank Service Charges 25 / Cr Cash 25

Customer check 480 returned NSF; 25 fee billed to the customer

Result: Dr Accounts Receivable 505 / Cr Cash 505. Customer balance rises by 505.

Customer later pays 505 by wire

Result: Dr Cash 505 / Cr Accounts Receivable 505

Common mistakes

Debiting Bad Debt Expense right away: the receivable is reinstated first; write it off only if collection fails.
Crediting Sales: the sale still happened; only the payment failed.
Forgetting to notify the customer: the receivable will age and the fee may be disputed.

Practice NSF check journal entry

These drills check your answer on live data, free, no account needed.

Recording a bounced checkClassify every line, enter both adjusted balances, then choose the journal entry the company must record for each item that affects its books.
A customer's check bouncedClassify every line on the bank statement and in the cash book, then enter the adjusted bank and book balances.
Every entry in one monthClassify every line, enter both adjusted balances, then choose the journal entry the company must record for each item that affects its books.

Questions

Is an NSF check a debit or credit to cash?

A credit to Cash. The deposit was debited when received; the bounce reverses it.

What if the NSF check was from a cash sale with no receivable?

Debit Accounts Receivable anyway to create a balance for that customer, or use a dedicated Returned Checks Receivable account.

NSF checkAn NSF (non-sufficient funds) check is a customer check the bank bounced after deposit. Subtract it from the book balance, reinstate the receivable, add fees.
Bank reconciliation journal entriesThe journal entries that follow a bank reconciliation, one per book-side item: service charges, interest, NSF checks, notes collected, book errors.
Bank fee journal entryRecord bank fees from the statement with a debit to Bank Service Charges and a credit to Cash. Monthly fees, wire fees, NSF fees and merchant fees.