Best way to handle checks issued but never cashed?

[Mike or Penny Novack]

>I would think that would not be good unless you actually put a "stop payment" in with your bank, and waited a decent amount of time for it to take hold. Otherwise, you could be surprised later. Better to create a ?Liability? account which contains the obligation and still allows you to align with the cash balance in your account.
>
>HT
>
No, Laura is correct. One of those state laws will specify how long a 
check that has not been "presented" remains valid. Off hand I don't know 
of anywhere that would be as long as two years. But that's mainly 
concerned with WHEN you make the adjustment entry (can conclude that the 
check CANNOT be cashed).

You didn't say what the checks were for, and that will play a large role 
in how you adjust. Normally you would NOT just want to cancel the 
transaction. Let me give an example.

You borrowed $500 from your great uncle George . That established a 
liability. You sent him a check for $500 to pay him back and this 
transaction wiped out the liability. You know that he indeed did receive 
the check. But he sat on the check, never deposited it, and whenever you 
try to raise the matter put you off, and now the time has passed and the 
check invalid. You have to decide what to do here. Technically this 
might be considered a "forgiven loan" (which is income to you). On the 
other hand, you might want to consider the loan still binding on you and 
figure you can try again when he's gone and his executer will probably 
accept the repayment.

Or might be a very different situation entirely. Point I am trying to 
make is that it's not going to be as simple as just trying to get the 
reconciliation process easier. That other side of the original 
transaction (why you wrote that check) still exists, still happened, so 
you have to account for THAT differently, not simply wipe it out.

Michael