Returned check
In one sentenceA check the business deposited that the bank then returned unpaid because of insufficient funds or an error in its details, so the deposit is reversed and the amount goes back to being owed by the drawer.
Simply put
When a check is returned, the accountant has already recorded it as a deposit in the bank, so the entry must be reversed and the amount returned to the customer's account, together with any fees the bank deducted.
It usually shows up in the bank reconciliation: a deposit on the statement matched by a deduction of the same amount a few days later.
Worked example
A distribution business deposited a customer's check for 15,000 SAR, and the bank returned it for insufficient funds.
Dr Accounts receivable - customer15,000
Cr Bank15,000
Amount owed again by the customer15,000 SAR
Don't confuse it with
Outstanding checksThose are checks the business issued that have not been paid yet, while a returned check is one the business received that was not paid.