[susslacey]

The company I work for has uncleared checks dating back to 1999. We want to get rid of these to have a true balance.

How do I get rid of these without throwing off all of the other year balances? Is there a way to do it in 2004. I know you could do a journal entry but that wouldn't unclear the checks.

PLEASE HELP,

Susan

[HHRoadtrip]

Now Susan, I'm no CPA, but I found the same problem at my business, with checks from prior periods never being cashed. The biggest problem, other than a slight (positive) impact on actual bank balance, was that some well intentioned employee would try to clean up the old items by voiding them- verry, verry bad!

I think the cleanest method is to create a journal entry for 12/31/2004. Enter a credit for each of the uncleared items. I used the original Account name and a memo noting the check number. Enter a debit for the checking account in an amount equal to the total of the uncleared checks, with a memo "uncleared check correction". When December 2004 is reconciled, mark as cleared all the checks and the 12/31/04 'deposit'. By this, the prior year statements will not be changed, the previously uncleared checks will finally go away, and bank statement balance will more clearly match the checkbook/Quickbook balance.

There is a potential IRS issue for cash basis businesses however, in that your company may have taken a deduction for expenses in prior years (on uncashed checks). There will be a reversal of the situation in 2004- but if the amounts are large, you better have a real accountant (or lawyer) give you guidance.

Good luck- it's a good feeling when those old checks disappear!