Here's a method for handling those pesky bounced checks so you don't lose sight of the offense until it's resolved...

1. Post a new withdrawal for the total amount of the NSF: original check amount + any fees the bank charged.
2. Enter "NSF" in the reference field, and put the offender's name in the Payor/Payee field.
3. Use the category split feature of FM to post the original check amount to the income-producing category and the bank fee amount to a separate category you create called BANK FEES. That will reduce the income properly, plus it will post bank fees separate from the income activity. If you want to charge the bank fees back to the original activity and not to a separate category, I would still use the split feature to show the breakdown.

DO NOT CHANGE the amount of the original deposit transaction. The bank statement will show the amount of the original deposit, plus the amount of the returned check and any fees associated. When you reconcile, you can clear the original deposit transaction, and the NSF withdrawal, and fees.

When the offender pays up, post a new DEPOSIT for her check, and again use the category split feature to post the original check amount back to the proper income category and the bank fees (assuming she pays them like she should!) to the BANK FEE category. That will close-out the bank fee, and essentially put the original income back to the right amount. If the offender never pays up, you still have line item visibility of the NSF and the PTO can decide to pursue her or eat it. We have found that sometimes an offender will pay off the original check amount, but we never get the bank fee (in our case, $20). By keeping the bank fee separate, you can at least still see it over time.

We usually keep bank fees separate, but you can certainly charge them back to the originating activity. For example, our PTO handles the money for our Book Fair, but all the net profit is eventually paid to the media center. We wait a couple of weeks for the checks to (hopefully) clear before we hand over the profit. If we get an NSF for the book fair, we charge the bank fee back to the book fair category since we don't feel the PTO should eat the fee if the offender never pays up.