What do you do with old uncleared transactions?

Mike or Penny Novack stepbystepfarm at mtdata.com
Wed May 13 16:55:03 EDT 2015

I'm going to stick my two cents in.

This is not a "one size fits all" situation and it isn't really just 

HOW you should treat an uncleared transaction depends on the situation. 
Let me give you an example, a real example, from an organization where I 
am on the finance committee and this came up.

a) The organization wrote a payroll check.
b) The employee deposited it in his account in his bank. No complaint 
about not being paid.
c) Check never got back to our bank. Presumed lost between banks.

No, we would not want to "void" showing we didn't pay the employee 
(annual total pay would be wrong, what we reported to governmental 
bodies wrong, etc.)

To give an example possible treatment, creating a child account under 
checking for "bank error". In effect, unless the banks ever catch what 
went wrong, temporary "miscellaneous" income (yes, the organization's 
bank was informed but doesn't consider it their problem -- it's the 
other bank that's out the money but the organization has no relationship 
with that bank). Or you could create a liability account "pending bank 
error" (I would decide THAT choice based on whether I expected the error 
to ever be resolved; if years old, probably not).

In other words, you have to decide what the situation is. In the initial 
question, the only information given us was that a check hadn't returned 
(and too stale at this point to clear). Won't know until the intended 
recipient has been contacted and asked if they received it and what 

Michael D Novack

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