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Level 1

How do I make a journal entry for uncleared checks?

There are a couple of checks to venders that were never cashed. How do I journal entry them out at year end?

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Best answer 10-15-2018

Best Answers
Level 6

No journal entry necessary. Just click + bank deposit and...

No journal entry necessary. Just click + bank deposit and create deposits using the same expense acct. as the check.  clear both when you reconcile. 

View solution in original post

22 Comments
Level 6

No journal entry necessary. Just click + bank deposit and...

No journal entry necessary. Just click + bank deposit and create deposits using the same expense acct. as the check.  clear both when you reconcile. 

View solution in original post

Level 15

You don't Offset them for year end. You only offset them...

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.

Level 3

Re: You don't Offset them for year end. You only offset them...

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? 


@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.



 

Level 15

Re: You don't Offset them for year end. You only offset them...

@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.

Level 3

Re: You don't Offset them for year end. You only offset them...


@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.


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. 

Level 15

Re: You don't Offset them for year end. You only offset them...

"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.

Level 2

Re: You don't Offset them for year end. You only offset them...

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.

Moderator

Re: You don't Offset them for year end. You only offset them...

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.

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

 

 

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

Level 2

Re: You don't Offset them for year end. You only offset them...

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?

Level 3

Re: You don't Offset them for year end. You only offset them...

@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."

QuickBooks Team

Re: You don't Offset them for year end. You only offset them...

Thanks for getting back to the QuickBooks Community, @CatHIB.

 

Allow me to step in and help guide you on how to write-off a check to a vendor in QuickBooks Online (QBO). 

 

The most efficient way to clear any payables is to pay it off.  Aside from making journal entries, this includes creating a clearing account

 

Once you're ready, you can follow the steps below to create a journal entry for an Accounts Payable (A/P) balance:

  1. Select the Plus icon (+) on the Toolbar.
  2. Under Other, select Journal Entry.
  3. Enter the Journal Date.
    The Journal Date is the date of the end of the time period.
  4. On the first line, select the expense or liability account affected by the bill from the drop-down list in the Account column.
  5. Enter the amount in the Credits column.
  6. Enter the reason for this journal entry in the Memo field.
  7. On the second line, select Accounts Payable from the Accounts drop-down list. The amount should be automatically entered in the Debit column.
  8. Select the Vendor from the drop-down list in the Name column.
  9. Select Save and close.

Once the Accounts Payable journal entry is created, you must set it to reverse:

  1. Select the Search icon on the Toolbar.
  2. Locate the journal entry you created and select it to open it.
  3. Select Reverse.
  4. Change the Journal Date to one day after the original journal entry's Journal Date.
  5. Select Save and Close.

For additional reference, you can check this article on how to resolve A/R or A/P balances on a cash basis Balance Sheet

 

This will get you on the right track. Feel free to leave a comment below if you have other questions about the A/P balance. Have a good one. 

Level 2

Re: You don't Offset them for year end. You only offset them...

JanyRoseB you are amazing! thank you

QuickBooks Team

Re: You don't Offset them for year end. You only offset them...

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. 

Level 2

Re: You don't Offset them for year end. You only offset them...

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

QuickBooks Team

Re: You don't Offset them for year end. You only offset them...

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:

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!

Level 1

Re: No journal entry necessary. Just click + bank deposit and...

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

Level 1

Re: How do I make a journal entry for uncleared checks?

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.

Level 1

Re: No journal entry necessary. Just click + bank deposit and...

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

QuickBooks Team

Re: How do I make a journal entry for uncleared checks?

Hi there, AnneSo.

 

Please know that both transactions will not be shown in your actual bank statement. 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 (for Cleared) appears.
  5. Click Save repeat the same process for the deposit.

 

Let me know if you need anything else. 

Level 1

Re: No journal entry necessary. Just click + bank deposit and...

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

Level 1

Re: No journal entry necessary. Just click + bank deposit and...

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.

QuickBooks Team

Re: No journal entry necessary. Just click + bank deposit and...

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.

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