What do you do with old uncleared transactions?

[Tommy Trussell]

On Thu, May 14, 2015 at 8:04 AM, Mike or Penny Novack <
stepbystepfarm at mtdata.com> wrote:

> Businesses may have additional requirements to fulfill. In Illinois, USA,
> after several years unclaimed property must be turned over to the state.
> Presumably that would include when a check is lost and the payee does not
> try to get a replacement. Your municipality may vary. David C
> _______________________________________________
>
> Another example of a different situation requiring specific handling.
> Really something to take up with your accountant how should be handled but
> my best guess would be to create a liability account for excheat*. Since
> this is going by years, under this account children for each year (in which
> there were unclaimed amounts).
>
> You would then put in a transaction for each amount correcting the bank
> balance (debit checking; credit unclaimed in this year; bank account
> balance now matches what the bank statement has) and best to make the
> description refer to the original transaction because you don't yet know
> whether the liability will be cleared by eventual payment to the state or
> the original payee.
>
> Each year, part of year end adjustments, payment to the state clearing the
> account of "unclaimed" whose time is up. It's a liability because while the
> money is in your bank account it isn't really yours. Belongs to the
> original payee or the state.
>
> Michael
>
> * sp?  But that's the term for the "sovereign" collecting unclaimed
> property
>
>
I believe the spelling is "escheat" or "escheatment"

http://en.wikipedia.org/wiki/Escheat