Our bank reconciliation shows unclaimed outstanding checks from prior years. I want to clear these stale dated checks. How do I properly journalize stale dated checks? Some people say to debit cash and credit a special liability since they believe it's still a liability. Then after a few more years, it would be okay to debit liability and credit income.

Is this true?

Thanks!

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Originally Posted by jaxl

Our bank reconciliation shows unclaimed outstanding checks from prior years. I want to clear these stale dated checks. How do I properly journalize stale dated checks? Some people say to debit cash and credit a special liability since they believe it's still a liability. Then after a few more years, it would be okay to debit liability and credit income.

Is this true??

Thanks!

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Generally these checks are moved to a liability account (Unpresented Checks) after 180 days. Outstanding checks (here in Texas) will be presented to the comptrollers office after 3 years. Debit your cash account and credit this liability account. Unless your check states void after so many days the checks are still good and should not be considered income ever.