In Janaury, we voided a check that had been cut in November, and quickbooks changed my financials as of the check date (november). I have other uncleared checks that I want to void but am hesitant as I dont want to change prior periods, any suggestions?
One way is to create an off-setting deposit dated today. They will cancel each other out on the next reconciliation, and won't affect previous financial periods.
QuickBooks offers a utility that will protect the prior year balances when
you void a Check dated in the prior year. This utility creates the Journal Entry
and reversing entry for you at the moment that you void the Check. However,
the utility only works with Checks (e.g., not with Bill Payments, Paychecks, etc.)
and only if the Check is coded to Expense or Other Expense accounts, and only if you have set a closing date for the previous period.
When you void a check dated in a closed period, QuickBooks warns you that it could affect your prior period reports, potentially causing inaccuracies. If the voided check was only associated with an expense account, QuickBooks creates journal entries to keep your prior period reports accurate. If the check was associated with any other accounts or items, you'll need to take extra steps to ensure that your accounting reports are accurate.
Important: You can set a closing date and password to prevent unauthorized or accidental changes to closed periods.
Checks associated only with an expense account
If the check you are voiding is only associated with an expense (or other expense) account, QuickBooks defaults to creating two journal entries to preserve your financial reports. The first journal entry, dated on the same day as the original check, duplicates the accounting entry on the check. The second, a reversing journal entry dated in the current period, reverses the accounting entry on the check. Example
Assume your close date is set to 12/31 of last year and you void a check dated on 12/15 for a $1,000 rent payment.
QuickBooks will record the following:
The original check is set to zero and marked as cleared.
A journal entry dated on the date of the original check with a credit to the bank account for $1,000 and a debit to the rent expense account for $1,000.
A reversing journal entry dated in the current period (on the date you voided) with a debit to the bank account for $1,000 and a credit to the rent expense account for $1,000.
Memos are added to all three transactions explaining the purpose of each.
Important: When you record the voided check, you can override the creation of journal entries by choosing "No, just void the check" from the prompt. It isn't recommended because it will change your financial reports for the closed period, potentially making your taxes inaccurate.
Checks associated with other accounts or items
Checks associated with other accounts
If the check you are voiding is associated with other accounts (non-expense), QuickBooks notifies you that voiding the check could affect previous financial reports. Examples include checks with associated items, bill payments, paychecks, payroll liability payments, and sales tax payments.
If the check you are voiding is associated with other accounts (non-expense), QuickBooks notifies you that voiding the check could affect previous financial reports. Examples include checks with associated items, and sales tax payments.
You can choose to override the warning and proceed, but we recommend that you consult your accountant because the voided check could create the following situations:
Voiding a check that was used to purchase inventory items may falsely reduce inventory on hand, making inventory balances inaccurate. Make sure to adjust your inventory as necessary after voiding a related check.
Voiding a check used to pay a bill will change your results in Accounts Payable aging accounts and bill reports. You must make adjustments to the accounts payable after voiding a related check.
Voiding a paycheck will not automatically create adjusting general journal entries. You must make adjustments directly to these accounts for the new amounts.
Voiding a check written for payroll liability payments will not automatically create adjusting general journal entries. You must make adjustments to the liability balance for payroll items after voiding a related check.
Voiding a check for sales tax payments will not automatically create adjusting general journal entries. You must make sales tax adjustments for the new amounts.
Please mark the post Solved (if this helped), or click the "thumbs up", if this resolves your issue.
Julia
Specializing QuickBooks accounting through financial statements! www.dbzequalcdz.com Advanced Certified QuickBooks ProAdvisor
Hi thanks for your reply, my issue is basically this, we have customers that requested withdrawals from their trading accounts, but for whatever reason they never cashed them, or didnt receive them. So these uncleared checks are basically against my customer liabilities. I cant have aged items on my rec for so long so I want to clean them up, but if I void it I know it will change my payable from like 12 months ago, making all subsequent period balances incorrect as well. How can I just void the check, but have the payable(and cash) adjusted in the current period?
KKelly,
Due to the nature of your business, I would recommend contacting your accountant regarding the legal implications of voiding checks in a trading account, there may be special rules. If your accountant says it is okay to void, follow the procedures I indicated above
Please mark the post Solved (if this helped), or click the "thumbs up", if this resolves your issue.and you will in essence be voiding the check in the current year.
Julia
Julia, sorry I am still not clear on this. I have spoken with our CPA, and because the checks have aged so long, it is ok to void the checks and deposit the money back into the customers account. So the checks we have cut, would have reduced our cash and reduced our customer liability, say for example in Jan 2010. Now in march 2011, I wish to void this check, and should see a debit to my cash, and credit to my payable, but in March 2011. Is this what would happen? From your original post, I fear it would only be correct and done in current period if this was verse an expense account?
Thanks!
@kk
If I understand this
Your customer has a liability account with you
You wrote him a check, lowering the liabilityty account
he never cashed it
Why not a journal entry
Debit bank account $xx
Credit Customer liability account $xx
memo = to reverse check #xxx not cashed
And if the customers cash on hand collects interest, calculate what he would have received, do another journal entry to credit his account for the interest and debiting interest expense.
When you reconcile the bank account, this journal entry should cancel the check
