[GNC] Double entry bookkeeping for purchases to be paid at later date

[Michael or Penny Novack]

On 11/7/2021 10:36 AM, Stan Brown wrote:
> On 2021-11-07 07:11, Sharon Sydnor wrote:
>> I am only experienced in basic bookkeeping but irrespective of what type of payment you intend to make, you have bought something you intend to pay for later hence IT IS a LIABILITY -so your second account WILL NOT  be a checking/payment account.
> I would agree if the purchase was put on account ("charged"). But when I
> write a check, I have paid for the purchase. That the check is postdated
> is immaterial: legally I am obliged to have funds in my account and
> maintain them there till the check is paid.

If we are being technical, the legal date is when we have made 
"constructive delivery" (mailed the check off). But more usual to use 
the date written under the assumption that this is known and the 
intention is that they will be mailed right out.

That there will almost always be a delay before the checks return to our 
bank is why at the end of a statement period we reconciled our checking 
account against the bank statement after adjusted for all checks 
outstanding. In other words, we expect the account in our books and on 
the bank statement will not agree because thew bank doesn't know about 
checks we have written but that they have not gotten back yet.

And spot on about the legality. It is not strictly legal to take 
advantage of "float". At least not here. Not unless you have an 
arrangement with the bank allowing overdrafts. If you do have an 
overdraft arrangement, then would be legal to use float up to that limit.

Michael D Novack