Stop Payment Check Cashed Bookkeeping Question

by Johnny

Stop Payment Check

Stop Payment Check

I put a stop payment on a check paid to my vendor and reissued a new one in Dec 2022.

This new check was cashed in Dec 2022. However, in June 2023, the vendor also cashed the check that I put stop payment on (I didn't place the 2nd stop payment after 6 months).

Now, the vendor agrees to refund this check amount to me. My question is: What Journal entry should I do when I receive the check refund from the vendor? Thanks, Johnny

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Aug 23, 2023
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starstarstarstarstar 		Journal Entry for Check Refund
by: BB

Certainly, Johnny! When you receive the check refund from the vendor, you'll want to reverse the effect of the incorrect cashing of the check that you put a stop payment on. Here's a journal entry you can make:

Debit (increase) your Bank Account: This reflects the increase in your bank balance due to the receipt of the refund.

Credit (decrease) Accounts Payable or the relevant Expense Account: This would reverse the additional payment made to the vendor.

Here's an example:

Debit: Bank Account (for the amount of the check)

Credit: Accounts Payable or Expense Account (for the amount of the check)

This journal entry will correctly represent the transaction in your financial records.

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Checkline Reserve Account

Is a checkline reserve account considered a loan account or a bank account?

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Aug 23, 2023
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starstarstarstarstar 		Checkline Reserve vs. Bank Account
by: Stephanie

A checkline reserve account, also known as a checkline credit account or overdraft protection, is typically considered a loan account rather than a regular bank account. It's a revolving line of credit that a bank extends to a customer to cover overdrafts in their checking account.

When a check is written for more than the amount in the checking account, the checkline reserve kicks in and covers the difference, essentially loaning the money to the account holder. Interest is often charged on the borrowed amount, and the account holder must repay it, much like any other loan.

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Check Not Cashed in Previous Year

How do you reissue a check that was not cashed in a previous year? The previous year has been closed, so the expense was already taken.

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Aug 23, 2023
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starstarstarstarstar 		Accounting For Uncashed Checks
by: BB

Reissuing a check that was not cashed in a previous year and after the previous year's accounts have been closed can be done through the following steps:

Void the Original Check: Make an entry in your accounting system to void the original check. This ensures that it cannot be cashed if found later.

Reissue a New Check: Write a new check for the amount in question, using the current date.

Record the Reissued Check: You may want to create a journal entry to record the reissued check. This should debit the bank account and credit a liability account like "outstanding checks" or "accounts payable."

Communicate with the Payee: Inform the payee about the reissued check and ensure they understand the previous check is void.

Document the Process: Keep clear records of the process, including why the check was reissued and the actions taken.

Since the expense was already recognized in the previous year, reissuing the check does not affect your income or expense accounts; rather, it will only affect the cash or bank account and possibly a liability account.

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My Check Bounced

How do I reverse a check in quickbooks that I wrote to a vendor and bounced

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Jun 07, 2010
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starstarstarstarstar 		Bounced Cheque
by: Bookkeeping Essentials

Go to your QuickBooks help menu and type in "bounced". You will get detailed instructions on how to handle the bounced cheque.

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Pass Through Check

One of the partners wants to make a charitable contribution to an organization through the company. He gave me a check to deposit and then I will write a check to the organization. How do I book this?

It's not a loan or a repayment of any kind. He wants the company to book the payment to the organization as a charitable contribution, but I don't know how to book the receipt of monies.

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Aug 23, 2023
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starstarstarstarstar 		Accounting for Donation Receipts
by: BB

In this situation, one of the partners wants to make a charitable contribution through the company. Since it is not a loan or repayment, the accounting treatment would involve recognizing both the receipt of the money from the partner and the payment to the charitable organization.

Here's how you might book this transaction:

Receipt of Funds from Partner:

Debit: Bank Account (for the amount received from the partner)

Credit: Owner's Equity or Partner's Capital Account (reflecting the partner's contribution to the company)

Payment to Charitable Organization:

Debit: Charitable Contributions Expense (for the amount paid to the charity)

Credit: Bank Account (for the amount paid to the charity)

This treatment ensures that the partner's contribution increases the equity of the company and is recorded as a charitable expense on the company's books.

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Replacement Check For An Employee

by Renee
(MA)

I need to replace an employee check from March 3, 2010 - do I date the replacement check with the same date since it's entered into the Paychex system and included in 2010's tax information, or do I date it with today's date?

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Oct 10, 2023
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starstarstarstarstar 		Check Replacement Procedure
by: BB

Great question! Replacing an old employee check comes with its own set of concerns, especially when you're trying to maintain accurate financial records. Let's tackle this.

Date the Replacement Check: Old Date or Today's Date?

Here's what I've found to be true: the date you put on the replacement check often depends on your accounting system and any legal or tax obligations you might have.

Given that this check is entered into the Paychex system and is included in 2010's tax information, you may think it's best to date it as March 3, 2010. However, I've learned that this could be problematic for a few reasons:

1. **Bank Policies**: Some banks may not accept checks that are dated too far back.

2. **Financial Reporting**: Dating the check with today's date will make it easier to reconcile your accounts and offer a clear paper trail. It could become confusing to have an old date on a check that was actually cleared or processed much later.

3. **Employee Confusion**: If the employee receives a check dated over a decade ago, they may also face issues when trying to cash or deposit it.


Best Practices

What I usually recommend in situations like these is to date the replacement check with today's date. However, make sure to annotate your accounting records and Paychex system to reflect that this new check is a replacement for one originally issued on March 3, 2010. This way, you maintain accurate records and avoid potential problems with banks or the IRS.

In any uncertain situation like this, it may also be advisable to consult with a professional to ensure that you're following the best practices that are compliant with the law and good for your bookkeeping.

So, there you have it! I hope this clears up any concerns you had about replacing an old employee check. Remember, accuracy is key in bookkeeping, especially in times when you can't afford to make any mistakes.

Feel more confident about issuing that replacement check? I'd love to hear your thoughts or any more bookkeeping questions you might have.

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Voided Checks

Checks written and expensed in 2022 have never cleared the bank. What is the proper way to record this?

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Oct 10, 2023
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starstarstarstarstar 		Outstanding Checks
by: BB

Great question! Dealing with checks that haven't cleared the bank yet can create some bookkeeping complexities. You want to ensure that your records are accurate, transparent, and easily reconcilable later. Here's what you should consider:

Outstanding Checks: What Are They?

Checks written and expensed but not yet cleared are known as "outstanding checks." This is a common issue that businesses encounter, and it's vital to know how to properly record these transactions in your financial system.

Accounting for Outstanding Checks

1. **Initial Recording**: I've found that the initial entry should already be done; the check is written and expensed, meaning it's been recorded in your accounting software or books as an expense for 2022.

2. **Bank Reconciliation**: During your month-end or quarter-end bank reconciliation, you'll notice that these checks haven't cleared yet. Keep them on your list of outstanding checks.

3. **Monitor**: Regularly review your bank statements to see if these checks eventually clear. If they do, simply mark them off your outstanding checks list during your next reconciliation process.

4. **Year-End Procedures**: At the end of the fiscal year, you still need to account for these checks as liabilities on your balance sheet under "Outstanding Checks" or "Accounts Payable."

What If They Never Clear?

I've learned that sometimes checks just never get cashed. If a significant amount of time has passed (usually 6 months or more, depending on your bank's policies), you may have the option to void the original checks in your accounting system and reverse the expense.

Consult Professional Advice

Given the complexity and potential legal implications, it may be wise to consult a financial advisor or auditor to ensure you're following the best practices and staying compliant with accounting standards.

In Summary

Outstanding checks are a common but manageable bookkeeping issue. Consistent and accurate record-keeping, coupled with regular bank reconciliations, will help you navigate this smoothly.

Still got bookkeeping questions? Feel free to ask! I'm here to help guide you through the ins and outs of keeping your financials in tip-top shape.

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