How do I make a journal entry for uncleared checks?

You don't Offset them for year end.

You only offset them because you want to Declare them as Dead or Lost.

It is not unusual at any month end or year end to have Checks that didn't make the statement cutoff date. You let them ride; typically, for checks, they are declared "stale and not able to be cashed" at about 6 months old. For Deposits it is more timely; a few days at most, such as over a three-day holiday weekend.

If you are going to declare them Stale and replace them, post the Deposit to an other liability account and then pay out that liability. You don't want to reduce the expense and then incur it again, for a Banking replacement issue.

I have a similar situation, but it's was for WIP. I recorded the check when it was sent via billpay. After 30 days bank notified that they deposited back into my account and we determined it went to the wrong address. So we sent another check. 

The returned amount was deposited into checking, however, there are still two additions to the WIP, but no credit for the uncashed check, so it's throwing off the WIP.  What kind of journal entry can I perform to get the uncashed check  into WIP? 

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@qbteachmt wrote:

You don't Offset them for year end.

You only offset them because you want to Declare them as Dead or Lost.

It is not unusual at any month end or year end to have Checks that didn't make the statement cutoff date. You let them ride; typically, for checks, they are declared "stale and not able to be cashed" at about 6 months old. For Deposits it is more timely; a few days at most, such as over a three-day holiday weekend.

If you are going to declare them Stale and replace them, post the Deposit to an other liability account and then pay out that liability. You don't want to reduce the expense and then incur it again, for a Banking replacement issue.

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@DecaturInvestor

None of the Banking mess is supposed to be in WIP at all. Let's take it a step at a time:

"The returned amount was deposited into checking"

Which means you enter a "placeholder" Deposit as "other current liability" = Not my funds to keep; not related to any Business activity. Just a Banking error "to be resolved later."

Then, you pay out the Liability on the replacement check. None of this is WIP. It would only hit WIP is the check comes back, you won't replace it, so you didn't have to pay for the goods or services after all, such as a Disputed charge you paid, then got your own check returned as settlement of that dispute with your vendor.

Never use JE for this. Never use JE for anything for Banking or where names are involved. That's another reason this isn't WIP; it isn't More Money to include for purposes of 1099-Misc reporting.

It's just a Banking error; don't make it worse.

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@qbteachmt wrote:

@DecaturInvestor

 

None of the Banking mess is supposed to be in WIP at all. Let's take it a step at a time:

"The returned amount was deposited into checking"

 

Which means you enter a "placeholder" Deposit as "other current liability" = Not my funds to keep; not related to any Business activity. Just a Banking error "to be resolved later."

 

Then, you pay out the Liability on the replacement check. None of this is WIP. It would only hit WIP is the check comes back, you won't replace it, so you didn't have to pay for the goods or services after all, such as a Disputed charge you paid, then got your own check returned as settlement of that dispute with your vendor.

 

Never use JE for this. Never use JE for anything for Banking or where names are involved. That's another reason this isn't WIP; it isn't More Money to include for purposes of 1099-Misc reporting.

 

It's just a Banking error; don't make it worse.

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I forgot to mention it was paying for a service I did receive, tree removal service,  for a real estate project I'm working on.  It's not an expense as we are flipping and twe put everything into WIP until we sell it, so once completed and sold  it will revert to COGS. That's why it's showing up in WIP. 

"I forgot to mention it was paying for a service I did receive"

Yes, you pointed out the initial Banking event is your Expenditure.

Nothing else is Paying for that service, again. It's trying to make sure some Funds Get There.

No, you don't put Everything into WIP. Banking errors are not WIP; you are not Paying again and again and again.

Hi - Thanks for the info. But how do you make a deposit to Other Current Liabilities. Using the "Deposit" feature in QBO, I can only deposit to a bank account or an asset account/ Please advise.

Thanks for joining this conversation, @CatHIB.

At this time, the option to choose Other Current Liabilities when using the Bank Deposit feature is unavailable. You can only pick a bank account or Other Current Assets.

Just to verify, are trying to transfer funds to the Other Current Liabilities account? If so, you can use the Transfer feature instead. Here's how:

1. Go to the Plus icon and pick Transfer.
2. Choose the bank account that the funds are coming out on the Transfer Funds From drop-down.
3. On the Transfer Funds To drop-down, select the Other Current Liabilities account.
4. Enter the necessary information, then hit Save and close.

That should do it. Consider checking out these articles for additional resources:

• Record and Manage Bank Deposits in QuickBooks Online.
• Transfer funds between accounts.

Keep me posted on how everything goes or if you're referring to something else. I'll be happy to help. Take care.

Hi Fritz,

i am trying to write off a check from a previous fiscal year that was never cashed. The vendor said not to worry about it so it is not Uncollected Property. I was following the above thread that said: "Which means you enter a "placeholder" Deposit as "other current liability" = Not my funds to keep; not related to any Business activity. Just a Banking error "to be resolved later. Then, you pay out the Liability on the replacement check. None of this is WIP. It would only hit WIP is the check comes back, you won't replace it, so you didn't have to pay for the goods or services after all, such as a Disputed charge you paid, then got your own check returned as settlement of that dispute with your vendor."

hat I am really just trying to do is figure out the write way to write-off a check to a vendor from a previous FY. Any ideas?

@qbteachmt actually we corrected it. Yes, real estate is a totally different subject and a lot of QB are not familiar with how to use QB for it. In a a prior separate post you wrote "

You post the Cost of the property and All Improvements as Asset = Construction In Progress or Work In Progress. That includes construction loan interest and any Costs for labor, materials, permits, etc.

Once the project is Done, you now see your Total invested.

When the project Sells, this is Gross income. The Deposit to banking is Income. You can do this with a Sales Receipt.

Additionally, you will Clear out that Asset account balance for your costs, to Zero, and that entry is put to Cost of Goods Sold, for the same date as the Sales.

And now your Reporting show the profit: Gross income minus costs, at the bottom of the P&L.

Don't enter Profit. Enter Gross = everything in full."

JanyRoseB you are amazing! thank you

You're very much welcome, @CatHIB.

I'm glad that I was able to help you today, and I appreciate your effort for following the steps I provided. Please know that you're always welcome to post if you have any other questions, I'll be around to help you out. 

Wishing you and your business continued success. Have a good one. 

How would I do this same thing but on QuickBooks Desktop Pro 2017?

Hi there, @lvillalobos.

I'd be happy to provide the help that you need with QuickBooks Desktop. Let's get this started.

If you're referring to write-off a check for vendors then, there are two ways to settle this out. The first is to create a journal entry with the appropriate vendor's details and apply it to the existing credit/debit afterward.

The second option is to use discounts to write-off small amounts. To do that, you'll need to create an account and item to be used when offsetting the vendor's bill/check.

Here's an article that provides all the details of this procedure: Write off customer and vendor balances.

I've included here additional resources about writing off invoices for your future reference:

• Accountant tools: Write off invoices
• Write off bad debt

If you need additional assistance in performing these steps, you may reach out to our Customer Care Team. They have tools to guide you with the process. 

This should get you covered today. Don't hesitate to let me know what the results are. I'll be around to provide further help. Take care!

I have done this previously but this time it is not clearing the balance when I reconcile and I do not know why

I offset the uncashed checks with a deposit but when I reconcile it does not clear them and I have not entered them twice

I have done this before and it has worked, I do not know what to do now.

I have entered a deposit to offset a check that has not cleared from the previous year, when I reconcile these are not clearing. I have done this before and it has been successful , I do not know why it is not working this time, I have not double entered any of these.

Thanks

I'll help clear out the check, AnneSo.

Both transactions will not be shown in your actual bank statement since they were not actually taken out of the actual account. This can be the reason why you're unable to clear them out in the Reconciliation page. 

You'll want to manually change their status to Cleared in the bank register. Here's how:

1. Open your Chart of Accounts.
2. Under the Action column of the bank account, select View register.
3. Look for the uncashed check. 
4. Double-click on the space under the Reconcile Status (✓) column until C (for Cleared) appears.
5. Click Save repeat the same process for the deposit.

Check out these reconciliation-related articles for additional guide and reference:

• Tips for year-end reconciliation 
• How do I view, print, or export a reconciliation report? 

I'd be glad to get back here and offer my help if you have follow-up questions.

Thank you I will give that a try. In the past I have entered deposits for the checks, then check them both off when I reconcile to balance each other out so I was surprised that it wasn't working this time. I will go ahead and check them off manually in the register.

Many thanks,

Anne

Thank you for the information, I tried this as I have done before, when I reconcile, this same amount shows as the difference, it does not clear these transactions.

Thanks for getting back in touch, @AnneSo.

I’m here to lend a helping hand in reconciling an account that is not clearing the transactions. You’ll need to run a Reconciliation Discrepancy Report, this will show you if anything has been changed, deleted or added.

Let me guide you how:

1. Go to the Reports menu. Hover over Banking and select Reconciliation Discrepancy.
2. Choose the account you're reconciling and then click OK.
3. Review the report. Look for any discrepancies.

Second, you’ll need to run a Missing Checks Report:

This report shows if there are any missing checks.

1. Locate the Reports menu. Hover over Banking and click Missing Checks.
2. Find the account you're reconciling and then push OK.
3. Review the report. Look for any transactions on the report that aren't on your bank statement. 

Third, let’s run a Transaction Detail Report:

The report will show if any transactions have been changed.

1. Find the Reports menu. Hover over Custom Reports and hit Transaction Detail.
2. Push the Display tab.
3. In the Date From field, choose the earliest date in QuickBooks for the account. 
4. In the Date to the field, select the date of your last reconciliation.
5. Go to the Filters tab.
6. In the Account field, locate the account you're reconciling
7. In the Entered/Last Modified field, set the Date from to the date of your last reconciliation. Then set the Date to the field to today's date.
8. Select OK to run the report.
9. Look for any discrepancies or transactions that don't match what's on your bank statement.

Fourth, look for reconciliation adjustments. Review the account and make sure no isn’t any inaccurate adjustments.

1. Go to the Lists menu and select Chart of Accounts.
2. Open the Reconciliation Discrepancies account.
3. From the Dates field, set dates for your last few reconciliations.

Then you can Finish Reconciling. 

If you have other questions, don’t hesitate to reach back out to the Community.

Hi! I am new to the community. My question is, I have a lot of uncleared checks since 2008. When I reconcile, I ignore the checks that didn't clear for the particular month and now it's piled up. Should  I just void the bill payment and the bill as well  or do a journal entry? Will it affect my P& L from previous years?

I appreciate a reply.

Thank you.

Welcome to Community @Nerak1,

Let me help you with your concern. You can do the Journal Entry to fix your uncleared checks, filter the date range to end of year. Follow these steps to create a journal entry in QuickBooks Online:

1. Go to the + New button.
2. Select Journal Entry.
3. Fill out the fields to create your journal entry.
4. Click Save and new or Save and close.

Also, I recommend contacting your account to ask for assistance to do your Journal Entries correctly.

You can run the uncleared checks report to review all the transactions.

Visit QuickBooks Online Help Article to learn more about bank activities, reports, reconciliation, and many more.

If you have additional questions, just leave a message in the comment section. I'm always around to help.