Hi chrissy30

In other words he took the cheque to the bank and put the entire 2126.40 in the bank and just withdrew 600 it seems.

What you would do is:

1. create the sales receipt for 2126.40 to clear the invoice as paid.
2. do a bank transfer of 600 from that chequing account to the Cash on Hand / Petty account - use the Transfer funds on the Banking tab

What ever happens with that 600 dollars from thereon would credit that Cash on Hand account.

Hope that helps.

He only deposited $ 1524.40 of the $ 2124.40 cheque and kept $ 600 cash. so I am really unsure how to record this.

on the  customer receipt is shows : Clearing items (cheque): $2124.40

                                                         cash received : $ 600 

                                                          credit memo : $1524.40

Hi chrissy30

If he went directly to the bank, they would have entered the full 2124.40 to deposit the cheque then he would take 600 after. When the bank looks at the cheque, they will only see 2124.40. They will never see 1524.40 as the cheque amount. It needs to be entered this way for reconciliation purposes. So they way I described it is correct.

What you would do is:

1. create the sales receipt for 2126.40 to clear the invoice as paid.  Clearing items (cheque) from the bank receipt
2. do a bank transfer of 600 from that chequing account to the Cash on Hand / Petty account - use the Transfer funds on the Banking tab. Cash received from the bank receipt

My bank statement only shows $1524.40 from the $ 2124.40 cheque  deposited. 

When doing the bank rec, you will clear the both the 2124.40 receipt and the 600.00 withdrawal. The sum of those will equal 1524.40. You will need to consider 2 transactions as I have stated the sum of this entire deposit of 1524.40 on the bank statement. You have no choice but to do it this way because you need to show that the invoice is paid in full using the 2124.40 cheque the client sent you. In the future, for better tracking, ask the bank teller to do 2 transactions rather than one so everything is better to see and reconcile later. (deposit first, then ask to withdraw money second. Treat the bank teller as you would with the bank machine)