A really big part of preparing a bank reconciliation is
dealing with items that should have cleared but still
These items are distorting your current balance in your
checking account and the net profit and loss of your
deleting a check will cause your bank balance and
balance sheet/ profit & loss to change FOR THE PERIOD
the check was written in. That is not a good
thing. If you have delivered reports to the
business owner, board of directors, your bank or other
outside party, you do not want to have to explain why
the net income or balance sheet has changed. It simply does
not make you look good! in fact, an unsophisticated
reader of the financial statement could unreasonably
worry that you may not know what you are doing.
A better alternative is creating
a journal entry in the current month and then clearing
the check and the journal entry on your next QuickBooks bank reconciliation -
here are the steps:
- Open the original check - on
the memo lines (both) write "this check voided
xx/xx/xxxx and replaced with check xxxx
- Create a journal entry to
Debit the bank account and credit the expense the
original check was posted to (if the check was a
bill payment check - post the journal entry to the
account used on the bill.
Journal entries can be found under the company menu.
- Enter a new check
transaction and print- post to the account used on
the Credit side of the journal entry in #2 above, in
the memo field - replaces check XXXX orig dated
WARNING- Your state government
wants you to treat uncleared checks as
unclaimed property, turning the money over to them!!
That's right- the technical term is called escheatment
and if the state were audit your company - an auditor
may ask for a list of voided checks. If you void checks,
keep the voided paper check with your tax documents (or
scan it), if a transaction was voided in QuickBooks - keep documentation in the folder
with the paper voided checks (if available) as to the
story behind the voided check..
Step one: Determine why the check is uncleared
A. Is this uncleared item
a duplicate entry?
Edit menu > Find > Advanced >
Click on the filter for amount and search QuickBooks
to see if indeed this is a duplicate entry which can
be deemed "erroneous-entered in error"
Click the reset button on the
Edit menu > Find > Advanced > Click on the filter
for name and enter the name of the payee on the
check and search through the transactions to
determine if the payment was included on another
check that was issued and cashed.
B. Is this uncleared item for a
service or product that was never rendered or
C. Did the payee on the check
die, move away to an unknown address, or lost the
D. Did the bank make an error -
clearing the check for the payee but never or did the
Step two: Decide the best way
to remove the transaction from QuickBooks since it will never clear.
i. If the check did not clear
due to C or D above ( in other words, the payee was
entitled to clear the check)
Search the internet for
escheatment rules in your state on the
keywords "Your State + Reporting unclaimed property
+ holder packet" . You should find a website that will
provide instructions on how to submit the funds to
your state as unclaimed property.
To avoid dealing with this extra layer of
bureaucracy, when a check remains uncleared for two
consecutive months, call the payee to find out why. If you
need to reissue the check, and do not want to change
the books and records follow steps 1-3 above to
replace the check. Another option would be to
mark that same check "to be printed" again.
And reprint with a new check number, leaving the
date in the same period. In your voided check
folder, write down on a piece of paper the original
check number, payee and date - and put a reason for
the void "payee never received - reissued with check
ii. If the check did not clear
due to A or B above - a replacement check is not
Make a journal entry -
Company Menu> Make Journal entry
Debit the bank account
Credit Expense account used on the original
transaction ( if the original transaction was a bill
payment, use the expense account on the bill being