Entering bank fees on a Deposit

Mindie

My client's bank is charge a $25 for every wire transfer they receive from a customer. I am looking for the best way for them to account for this fee.

For example, the customer sends $1000 to pay for an invoice. The bank keeps $25 and their bank account is increased by $975.

We need the $1000 to apply to the invoice, the bank deposit to only show $975, and the $25 to go to the expense account.

Currently they are forcing a $25 discount on the invoice. Then they are making a manual journal entry to move the $25 from the discount account to the bank fee expense account.

There has to be a better way!

My first thought was to create the first line of the deposit to the customer for $1000 and then make a second line to deduct the $25 from the G/L account. The posting routine will not allow a debit amount.

I could find and comment out the code that is preventing that post but I haven't determined the consequences of that. Before I run through all of that I'd thought I'd ask for other ideas?

What do you think would be the best solution to this problem?

Thanks!

bbrown

Process the customer payment and bank fee as 2 different transactions.

Transaction 1:

The customer has paid $1000 towards an open invoice:

CASH $1000 Debit
AR $1000 Credit

Apply payment to invoice

Transaction 2:

Bank charges you $25.00

Option 2:

Treat the $25 as a payment discount.



Cash $25 Credit
Bank Fees $25 Debit

Mindie

Thank you for your reply.

Option 1 will result in a bank deposit that does not equal the bank statement. This will make bank rec. impossible.

Option 2 is what they are doing now. It's a PITA.

Does anyone know what problems would be caused down stream if I comment out the error that is preventing them from posting the debit on the bank deposit?

ecclectic

Mindie wrote:

Thank you for your reply.

Option 1 will result in a bank deposit that does not equal the bank statement. This will make bank rec. impossible.

Use the same document no for both transactions. when reconciling u just cumulate transactions having same doc no.

Mindie

So have a deposit for $1000 and then a journal entry to the bank account for -$25.

It might work.

Since 75% of their payments come in this way it is still messier than I'd like. It does require 2 different screens and still an ugly bank rec.

I suppose it is better than what they are doing currently.

ecclectic

Mindie wrote:

It does require 2 different screens
.

u can actually process both entries in the general journal batch if u want.

Mindie

That's very true. They like the deposit form but I can just have them move the whole transaction over to the gen journal.