To enter a NSF cheque -

Question

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When a cheque is returned NSF (non-sufficient funds), the original receipt entry in the receipts journal needs to be reversed to reflect that the payment was not received. This can be done by entering a new entry in the receipts journal with the same date and customer name, but with a negative amount equal to the amount of the original receipt. This will effectively cancel out the original receipt and remove the incorrect balance from the accounts receivable ledger. It is not necessary to create a sales invoice or reverse the receipt in the cash sales journal.

To Enter a NSF Cheque -