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haskenazi1
March 27, 2019
Question

Fraudulently Deposited Check to Vendor

  • March 27, 2019
  • 2 replies
  • 0 views

I've posted in the past about a similar issue, but this is slightly different. The first post was about recording a check that was sent to vendor, then returned to us, and subsequently repaid. We resolved that scenario with journal entries.

 

This 2nd scenario is different as the check was not returned to us so there is no offsetting deposit.

 

Rather, The check was deposited by someone else and verified by the bank as fraud. So we've reissued the payment to the appropriate vendor who has since deposited that new check. But we still have the fraudulently deposited check applied to the original bill and also need to track it as a receivable bc the bank owes us the money once they formally finish the investigation.

 

QUESTION

  1. How should I account for this?
  2. Should I unlink the fraudulently deposited payment from original bill? I don't think so especially since already reconciled. 
  3. If I don't unlink the original payment from bill, how do I record the subsequent payment to the vendor? 
  4. How do I ensure the vendor doesn't appear to have been paid twice for this one bill?
  5. What do I do in order to track the receivable owed by the bank? 

2 replies

Angelyn_T
Angelyn_T
March 27, 2019

Hi there, @haskenazi1.

 

I'm here to help handle/record the fraudulently deposited check in QuickBooks Online (QBO).

 

If the money in and money out was posted on the bank statement, then, you can unlink the fraud payment of the bill and change it to a deposit. You can deposit it to the accounts payable.

 

To unlink the fraud payment of the bill:

 

  1. Click on Expenses at the left pane.
  2. Select Vendors.
  3. Select a vendor under Vendors.
  4. Open the Bill Payment (Check) by clicking View/Edit under Action.
  5. To unlink the bill and the payment, remove the check-mark beside the Bill.

Once done, apply the next payment to the bill.

 

Also, you may check these articles for future reference:

 

 

Just add a post/comment below if you have any other QuickBooks questions. I'll be always happy to help you!

H
haskenazi1Author
April 1, 2019

Thank you for taking the time to reply. Unfortunately this isnt the right resolution for me bc as mentioned, the check has not yet been refunded by the bank. I know how to handle that situation, but the question is how to handle a situation where the bank hasnt returned the first check yet which is already listed as the bill payment. 

 

I believe I need to add a receivable and a payable transaction. Receiveable for the money the bank owes me once they complete their investigation, and the payable for the money I still owe the vendor.

K
KhimG
April 1, 2019

Hello there, @haskenazi1.


Thanks for the prompt response. Allow me to step into this discussion and help handle the check that hasn’t been refunded by the bank.


You can create a vendor (bank) and edit the bill payment (first check) in order to link the second check to the original bill. Let me show you how:

  1. Go to Expenses and select Vendors.
  2. From the Vendors window, click New Vendor.
  3. Under Vendor Information, enter the Bank’s name and details.
  4. Hit Save.

 

 

Once done, edit the payment attach to the bill and change the Payee name. Here’s how:

  1. Go to the Expenses menu and select Vendors. 
  2. Double-click the vendor's name.
  3. Under the Transaction List window, select the Bill Payment and click View/Edit.
  4. Click the Payee drop-down and select the name of the bank.
  5. Hit Save and close.

 

 

 

You should now be able to link the second check to the bill. Take a look at this article for more information: How to enter and pay bills.


Once the investigation is over and the bank refunds you the money, create a deposit using Accounts Payable as the posting account and the vendor you made to offset the amount.


I’m adding these helpful articles for reference: 

That should keep you going today. Reach out to me if you have any follow-up questions, I’m always here to help. Have a good one!

M
MargaritaV
June 17, 2022

Hello, I am very late in response to this.

 

I just encountered this situation with our company and these are the steps I took to resolve the issue.

Please note the check that was originally issued had been cleared from the bank, so there was no way we could void the check.

 

1. I went to the fraudulent check and unapplied it to the corresponding invoices.

2. I created a journal entry 

     I debit the account the money was going back to (to show deposit - since bank was refunding us the check)

     I credit Accounts Payable and selected the corresponding vendor which will create an invoice to apply the fraudulent check to.

3. Go back to the vendor account and apply the fraudulent check to the General Journal Entry to clear the over payment.

4. Go to pay bill and issue new check for the outstanding invoices.

 

Hope this helps!

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