Old uncleared check to income???

Alireza355 · ‎December 10, 2018

I have an old uncleared check (bill pay) from previous fiscal year. I don't want to void the check, and I don't want to repay the vendor again. I want to write it off as an income in current fiscal year without doing anything in the previous one. How can I do that without voiding the check?

john-pero · ‎December 10, 2018

One trick is to create a deposit in current period for the check amount, charging to income. Then you will have matching entries that cancel each other in your next reconciliation.

You are correct that voiding in a previous period would affect your P&L and Balance Sheet from the prior period and could call for filing amended returns. Voiding does offer up the opportunity to create a balancing journal entry while voiding but it enters it as of the date of the original check, not good for dealing with past periods.

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john-pero · ‎December 10, 2018

One trick is to create a deposit in current period for the check amount, charging to income. Then you will have matching entries that cancel each other in your next reconciliation.

You are correct that voiding in a previous period would affect your P&L and Balance Sheet from the prior period and could call for filing amended returns. Voiding does offer up the opportunity to create a balancing journal entry while voiding but it enters it as of the date of the original check, not good for dealing with past periods.

Alireza355 · ‎December 10, 2018

Thanks. I am open to other tricks and ideas as well. The problem is that the bill pay check is not posted to any expenses, it is posted to items. Can I still do the same?

qbteachmt · ‎December 10, 2018

"I am open to other tricks and ideas as well."

This is pretty straight forward. You actually incurred that, but they never cashed the check = income to you. Deposit and Done.

If you need to evaluate it further:

First, Dates Matter.

If you are cash basis, the date of the check is the date of the expense. If you are accrual basis, the date of the bill is the date of the expense. Assuming this was Expense.

Beyond this, the Significance matters. If this is a Huge amount, you consider if this requires any amendment. If it affects something tangible, you examine that condition, as well.

For instance, a $10,000 check to a Subcontractor who never cashed the check is the same as you getting it back from them. Or, if you bought a fixed asset, it cost you nothing. Etc.

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Old uncleared check to income???