Best way to handle checks issued but never cashed?

[Laura Lincoln]

Options 1 & 2 are both possible except that you end up changing the
financials of a prior fiscal year. These are not bills issued but actual
uncashed checks. The expenses associated with these checks have been
deducted on a prior year tax return. Voiding or deleting them will only
cause havoc with the tax preparer because you will change last year's
Retained Earnings.

 It is better to enter a reversing entry in the current period and use it to
offset the checks written.

On Mon, May 11, 2009 at 11:19 AM, Michael McKay
<michael.mckay at sympatico.ca>wrote:

> Most countries have a payment association or some other agency to regulate
> payments.  In Canada, there is the Canadian Payments Association (CPA).
>  The
> CPA establishes and regulates the system of exchanges of payments and
> defines the rules related to how payments should be handled by the
> institutions.
>
> The CPA website FAQ states the following:
>
> When is a cheque considered stale-dated, and is it no longer valid after
> that point?
>
> Under CPA Rule A4, Section 21, a cheque is considered stale-dated after six
> months, unless it has been certified. Although it may be returned through
> the clearing for that reason, there is no obligation to do so, and the
> payor's financial institution may still accept it as a valid payment item.
> An institution accepting a cheque that is dated more than six months
> earlier
> may choose to contact the payor's financial institution to confirm whether
> the cheque will still be accepted.
>
> In GNU Cash, you can:
>
> 1. Just delete the entries.  This is the simplest solution and will remove
> all records of the payments being made.
>
> 2. Set the payment amount to zero and change the memo or description to
> indicate that the check was voided.  This keeps a record of the cheque in
> the system in case the payee asks about it. In that case where the check is
> processed, you can easily correct the entry.
>
> 3. Add a reversing transaction to remove the effect of the entry at some
> later date and clear both transactions.  This is good approach if you have
> "closed" prior years but it leaves the impression that the cheque was
> cashed
> which is false.
>
> 4. If you have a more complex situation with bills and payments, then you
> may need to also adjust the accounts to show the bill as paid but the
> payment not collected.  This would look like an allowance for uncollected
> payments in accounts payable similar to an allowance for bad accounts in
> the
> accounts receivable.  In this case, you would change the payment in
> accounts
> payable to the allowance account and delete or void the entry in the
> checking account.
>
>
>
> Yours,
>
> Michael McKay
> MJM Consulting
> 613.724.8169
>
>
> -----Original Message-----
> From: gnucash-user-bounces at gnucash.org
> [mailto:gnucash-user-bounces at gnucash.org] On Behalf Of Marc Evans
> Sent: May-11-09 7:18 AM
> To: gnucash-user at gnucash.org
> Subject: Best way to handle checks issued but never cashed?
>
> Hello,
>
> I have been using gnucash for several years. During that time I have
> issued several (about 8) checks that the people to which they were
> issued have never cashed them. These are usually more than 2 years old,
> and hence I do not expect that they ever will be cashed. They are small,
> adding up to maybe $200 in total. The question therefore is, what is the
> best way to handle these in gnucash? For example, should I create a
> special account and transfer them to this special account?
>
> Thanks in advance for any advice.
>
> - Marc
> _______________________________________________
> gnucash-user mailing list
> gnucash-user at gnucash.org
> https://lists.gnucash.org/mailman/listinfo/gnucash-user
> -----
> Please remember to CC this list on all your replies.
> You can do this by using Reply-To-List or Reply-All.
>
> _______________________________________________
> gnucash-user mailing list
> gnucash-user at gnucash.org
> https://lists.gnucash.org/mailman/listinfo/gnucash-user
> -----
> Please remember to CC this list on all your replies.
> You can do this by using Reply-To-List or Reply-All.
>