Can I use 'Manual Journal Entry' to fix a payment error into my bank a/c?

Hi there,
A company accidentally paid money into my business bank account and of course I sent it back to them. Can I use the Manual Journal Entry to account for this error by entering the sum of money as ‘credit’ with it’s date and then enter the same amount as ‘debit’ with the date I sent it back to them?
OR is there some tool available when I’m reconciling my accounts that will sort this?
Thank you in advance,

1 answer

PeteF November 6, 2016

This isn’t income for your company at all, so a manual journal is a good way to deal with it since it won’t be hitting the income statement. One I might suggest is:

  1. Upon receipt of the funds received in error
    DR Cash (Balance Sheet)
    CR Funds received in error
  2. When you pay the money back
    DR Funds received in error (Balance sheet)
    CR Cash (Balance sheet)

Pop a narrative into the journal entry so your accountant or anyone reviewing it at a later date will understand what it relates to. 

Hopefully this is of help,
– Pete F


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