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    susslacey's Avatar
    susslacey Posts: 1, Reputation: 1
    New Member

    Dec 9, 2004, 12:31 PM
    Quickbooks Question
    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.


    HHRoadtrip's Avatar
    HHRoadtrip Posts: 4, Reputation: 1
    New Member

    Jan 8, 2005, 08:54 PM
    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!

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