Re: [GNC] Bank check - debit and credit?

[ornd25]

"For a one off for a personal account i would record it as follows. You willnot 
normally be notified by the bank when the bank cheque is cleared sothere is 
little point in having a clearing account as you might for personalcheques. As 
Mike points out it isor may be a negotiable instrument and maynot necessarily 
be cashed by the receiver. That is not really your concernonly the receiver's 
and the banks. The only other possibility is that manybanks will charge a fee 
for issuing a bank cheque:
DR   CRAsset:Checking Account
Expense:Bank Fees   Expense:Repairs 
  where  = +   and  is the amount of the bank 
check.I would record in the Description and/or memo fields for the expense that 
itwas a bank cheque and the bank cheque number and you would record your 
owncheque number made out to the bank as you would normally for any otherch
 eck.Recording the details is useful should the bank cheque not be cashed by 
therecipient - unlikely if a business but it has happened in cases where it 
hasbeen posted to someone and not been received. The bank can track down if 
itwas cashed and by whom if necessary.David Cousens"

Thank you - I appreciate the answers. This issue is resolved.


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Re: [GNC] Bank check - debit and credit?

[David Cousens]

For a one off for a personal account i would record it as follows. You will
not normally be notified by the bank when the bank cheque is cleared so
there is little point in having a clearing account as you might for personal
cheques. As Mike points out it isor may be a negotiable instrument and may
not necessarily be cashed by the receiver. That is not really your concern
only the receiver's and the banks. The only other possibility is that many
banks will charge a fee for issuing a bank cheque:

DR   CR
Asset:Checking Account
Expense:Bank Fees   
Expense:Repairs   


where  = +   and  is the amount of the bank check.

I would record in the Description and/or memo fields for the expense that it
was a bank cheque and the bank cheque number and you would record your own
cheque number made out to the bank as you would normally for any other
check.

Recording the details is useful should the bank cheque not be cashed by the
recipient - unlikely if a business but it has happened in cases where it has
been posted to someone and not been received. The bank can track down if it
was cashed and by whom if necessary.

David Cousens




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David Cousens
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Re: [GNC] Bank check - debit and credit?

[ornd25]

On 9/19/2019 9:20 AM, orn...@tutanota.com wrote:

>> How does one debit and credit for a bank check when the person/company 
>> doesn't want to accept a personal check? I usually forgo reality and just 
>> record that I sent the personal check directly to the individual, but that's 
>> not exactly what happens.
>>
>
> I think this depends on how fancy you want to be. Perhaps not unrelated 
> to how you enter OTHER "check" transactions for which there is no check 
> number like automatic payments, one time electronic payments, etc.
>
> IF the money (for purchase  the bank check) came from the checking 
> account, I'd probably treat is as a numberless check putting into the 
> description column something like "bank check to..." instead of just 
> the payee. 
>
> Michael D Novack
>
Mike, 

That's the way I was doing it previously, but persuaded myself that I should 
track it "properly." My original question meant, "I give the bank check number 
527 for cash or made out to the bank for $75, so Cr Checking, Dr bank. Then 
they hand me a cashier's check - is that "other income?" Then I give the check 
to the repair service - what am I to Dr and Cr at that point.

As I said, that was my original question, and I withdraw it; I will call check 
number 527 "Repair Service - Bank Check." That's close enough for personal 
expenses. Thanks.

For what it's worth, I do "number" my electronic payments with the next paper 
checks in order, then I destroy the paper checks. This allows me to sort by 
check number and find the payment, though I do add in Notes: "ePay - numbered 
for convenience." Then I add the pseudo numbers to the balance statement.

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Re: [GNC] Bank check - debit and credit?

[Mike or Penny Novack]

On 9/19/2019 10:35 AM, orn...@tutanota.com wrote:


Let me expand a little. This is for personal use, such as the purchase of artwork or a 
service, so its purpose is not for a business. Recent examples were for repair of a 
vintage fountain pen or a wrist watch. The repairers asked for a bank check, so I wrote a 
check to the bank for cash, the bank then gave me a "bank check," which I sent 
to the repairer.

What are the mechanics of double entry debits and credits? If I write the check 
to the bank do I then have to show income to bring it back in?
 a) If this is frequent, I would probably create an account for 
"negotiable instruments" (or just "bank checks" if that's the only type 
dealt with). Your purchase of one is just an asset transfer transaction. 
When and if used to pay an expense* that transaction would be debit 
expense and credit this asset. The reason I put the asterisk is often 
the bank check is needed to purchase an expensive asset (car, house, art 
work, etc.) so the debit side would be for some fixed asset,not an expense.


b) If you are bringing it back in (never used) that would not be income 
but again an asset transfer transaction. That is actually a fairly 
frequent use of a bank check, needed if taking part in an auction in 
case you are high bidder but otherwise returned to the bank.


Michael D Novack
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Re: [GNC] Bank check - debit and credit?

[Stephen M. Butler]

On 9/19/19 6:20 AM, orn...@tutanota.com wrote:
> How does one debit and credit for a bank check when the person/company 
> doesn't want to accept a personal check? I usually forgo reality and just 
> record that I sent the personal check directly to the individual, but that's 
> not exactly what happens.

Almost all of my check payments are made via the bank's online bill
paying system.  Even personal folks (yes, there are a few hand written
checks).  I make no difference between them or ACH transactions that are
initiated based of use of the debit card.  Well, one small difference. 
Hand written checks have their check number recorded in GnC.  Others
have no check number recorded even though the bank does have a number
that I could use for that purpose.

Many of the "bank" checks end up being electronically delivered though
some of them are printed and mailed by the bank to the recipient. I
treat them all the same way.  A transaction between the checking account
asset account and some expense (or liability) account.

I hope I understood your question correctly.

--Steve

-- 
Stephen M Butler, PMP, PSM
stephen.m.butle...@gmail.com
kg...@arrl.net
253-350-0166
---
GnuPG Fingerprint:  8A25 9726 D439 758D D846 E5D4 282A 5477 0385 81D8


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Re: [GNC] Bank check - debit and credit?

[ornd25]

> You left out a few details.  Is this a business expense?  Or is it something 
> else?  In the accounting world, purpose is the driving force.  
>
> If you are just concerned about the mechanics of the money flow, you would 
> show a conversion to cash or whatever medium you used as an intermediate 
> step. That, of course requires appropriate accounts, such as petty cash, for 
> example.
>
> David Carlson
>
> On Thu, Sep 19, 2019 at 9:22 AM <> orn...@tutanota.com 
> > > wrote:
>
>> How does one debit and credit for a bank check when the person/company 
>> doesn't want to accept a personal check? I usually forgo reality and just 
>> record that I sent the personal check directly to the individual, but that's 
>> not exactly what happens.
>>
Let me expand a little. This is for personal use, such as the purchase of 
artwork or a service, so its purpose is not for a business. Recent examples 
were for repair of a vintage fountain pen or a wrist watch. The repairers asked 
for a bank check, so I wrote a check to the bank for cash, the bank then gave 
me a "bank check," which I sent to the repairer. 

What are the mechanics of double entry debits and credits? If I write the check 
to the bank do I then have to show income to bring it back in?

As I mentioned, I ended up showing a check written to the repairer, rather than 
reflecting the actual purchase of a bank check.
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Re: [GNC] Bank check - debit and credit?

[David Carlson]

You left out a few details.  Is this a business expense?  Or is it
something else?  In the accounting world, purpose is the driving force.

If you are just concerned about the mechanics of the money flow, you would
show a conversion to cash or whatever medium you used as an intermediate
step. That, of course requires appropriate accounts, such as petty cash,
for example.

David Carlson

On Thu, Sep 19, 2019 at 9:22 AM  wrote:

> How does one debit and credit for a bank check when the person/company
> doesn't want to accept a personal check? I usually forgo reality and just
> record that I sent the personal check directly to the individual, but
> that's not exactly what happens.
>
>
>
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-- 
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Re: [GNC] Bank check - debit and credit?

[Mike or Penny Novack]

On 9/19/2019 9:20 AM, orn...@tutanota.com wrote:

How does one debit and credit for a bank check when the person/company doesn't 
want to accept a personal check? I usually forgo reality and just record that I 
sent the personal check directly to the individual, but that's not exactly what 
happens.


I think this depends on how fancy you want to be. Perhaps not unrelated 
to how you enter OTHER "check" transactions for which there is no check 
number like automatic payments, one time electronic payments, etc.


IF the money (for purchase  the bank check) came from the checking 
account, I'd probably treat is as a numberless check putting into the 
description column something like "bank check to..." instead of just 
the payee. But if there was going to be a significant delay before the 
bank check/cashiers check was handed over might treat it as an asset << 
it perhaps is NOT likely to be actually used, say necessary to take part 
in bidding, but only used if one wins the auction >>


But I am NOT an accountant. Just quite aware that this is normal 
procedure for certain sorts of transactions.


Michael D Novack


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