How do I handle uncleared checks with new system set-up?

dbell1 · ‎January 08, 2019

I am a treasurer of a church, not an accountant, and have just upgraded from Quickbooks Pro 2007 to QB Premiere. I started using the new system January 1, but apparently I handled uncleared checks incorrectly during the setup. I had my checking balance from the prior year, but still had 5 checks that had not cleared the bank, so the way I handled this was on 12/31 to enter my opening balance adjusted up enough to cover those 5 checks, and then re-entered the checks normally so my bank balance would be correct going into the new year but could still clear them out when I reconcile at the end of the month. Of course it didn't dawn on me that this would hit the retained earnings (which it did not need to do), but I now understand why it did this.

I am still early enough in the year to start over and would like to know the correct way to set up the system with the correct opening checking balance and still be able to reconcile those 5 checks when I reconcile and it not affect the retained earnings. Any suggestions?

Linette What · ‎January 08, 2019

When you started you should have a balance sheet for your opening entry and you are entering a journal entry for opening balances.

When you posted that entry in increased checking for those checks. That will throw the entry out of balance and you have to post that somewhere. I would post it to ask my accountant or retained earnings.

Then you go to the check register and post the checks with a date on or before the beginning balance. The account you post those accounts to is ask my accountant or retained earnings. This will clear the adjustment on the opening entry and put your balance sheet back in balance.

Run your reports and see if you see what else is out of balance.

Also, check your date on those checks and the opening balance entry to make sure they are dated correctly.

View solution in original post

Linette What · ‎January 08, 2019

When you started you should have a balance sheet for your opening entry and you are entering a journal entry for opening balances.

When you posted that entry in increased checking for those checks. That will throw the entry out of balance and you have to post that somewhere. I would post it to ask my accountant or retained earnings.

Then you go to the check register and post the checks with a date on or before the beginning balance. The account you post those accounts to is ask my accountant or retained earnings. This will clear the adjustment on the opening entry and put your balance sheet back in balance.

Run your reports and see if you see what else is out of balance.

Also, check your date on those checks and the opening balance entry to make sure they are dated correctly.

Linette What · ‎January 08, 2019

To get started you print a balance sheet and put in an opening balance journal entry.

On that entry you increased the Checking account so that you could enter those five checks.

When you did that, it would throw your entry out of balance and in order to correct it you have to put that money somewhere. Put it to ask my accountant or retained earnings.

Then you go to the checking account and enter those checks with a date the same as or before your opening balance. The account you post those checks to is going to be ask my accountant or retained earnings. This will clear your adjustment that was made on the opening balance and put your beginning balance sheet in the new system back in balance.

qbteachmt · ‎January 08, 2019

Yes, they are Prior Year Equity = Retained Earnings is right. This is not New Year expense. You reported it for the Prior year.

You Make Deposit to checking for Equity = money in the bank per the statement.

You enter Uncashed Checks as Equity, because last year, they were expense. This year, they are Equity. You Backdate them and you can list expense or equity, because it's the Same, now, in the new year. Last Year's expenses are rolled into this year's equity.

The Banking date is your Spending Date, not the Cleared date, for the expense. That is Prior Equity, now.

dbell1 · ‎January 15, 2019

Thanks to all for the answers. Most of this issue to do with my inexperience. I did not have an accurate balance sheet. I paid an accountant a couple of hours and fixed the issue.

DiannaS · ‎February 10, 2024

I'm not sure I did it the right way, but here's how I handled the uncashed cheques when I transferred to a new system that was not very compatible with the old.

I didn't touch the opening balances. I just calculated the total amount of outstanding cheques and created a journal entry for the same day as the opening balance:

Bank DR - Total Amount of Cheques

Bank CR - Created an entry for each outstanding cheque with the cheque number

Topics

Training

Community

Resources

How do I handle uncleared checks with new system set-up?