There are a number of reasons why you may have old, uncleared checks on your books. Whatever the reason, it is important to clean any checks that should be cleared off your books in order to make sure you are not overstating your cash balance.
First, you need to determine if the money is still owed to the customer/client/donor. Try contacting them to see if they have received the check. If the “customer” does not have the check, you will need to re-write the check and send it to them. Then you will need to void the old check and note in the memo line the check number you are replacing it with. If you determine the uncleared check is still owed, and you are unable to find or reach them, you must turn the money over to the unclaimed property division of the State of Arizona. For Arizona companies, you can visit http://www.azunclaimed.gov/ for more information on how to submit unclaimed funds.
If you determine that the uncleared check is not owed, then you can make a journal entry to clean the old uncleared items out of your outstanding checks listing. To do this, you would debit cash and credit the expense the check originally was expensed to. I would recommend noting the journal entry number of the entry you make to offset the uncleared check in the memo line of the check. Then on the next reconciliation you perform, you can clear the old uncleared checks and the journal entry that offsets the checks (for a zero net effect).
QuickBooks bank reconciliations can really get cluttered up with these old items. It’s important to monitor, follow up on, and clean up any of these older items. Luckily, QuickBooks has many handy features that can make this task easier. Check out this article on why CPAs everywhere love QuickBooks.
Do you still have any questions? Feel free to contact one of Henry+Horne’s professionals, who are eager to assist you.
By Michelle Housman