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General Accounting Discussions: Dealing with an uncleared check from a prior fiscal year

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    How do I deal with a check that was written to pay an expense in a prior fiscal year and was not cashed by the vendor? The check is now void as it was written over a year ago. Do I credit the expense account, and date the credit in the current fiscal year, as the fiscal year in which the payment was made has already been closed out?
    Thankful People: mulalam, tgm603
    • CommentAuthorcbmtax
    • CommentTimeJul 8th 2009
     
    If your prior fiscal year is closed, then that is exactly what I would do (and have done before). Don't forget to put a stop payment on the check as well.
    Thankful People: mulalam, tgm603
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    If the vendor is not traceable, you may debit cash and credit retained earnings, it relates to the last year. However, if it is felt that the vendor may contact for his payment, then the correct entry would be debit cash and credit accounts payable. Since the check is more than a year old it can not be cashed, therefore no need to instruct bank for stop payment.
    Thankful People: mulalam, tgm603
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      CommentAuthorania13
    • CommentTimeJul 25th 2009
     
    Even though it's been a year, I would still contact the bank to put a stop payment. You'd be surprised how little attention some of the teller pay. Also, I would debit cash (which would take care of that outstanding item on your bank reconciliation) and credit retained earnings, since the expense pertains to last year. I would not credit A/P as the previous member suggested since you never make journal entries to A/P or A/R otherwise your subledger won't tie to GL.

    I hope that helps.

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    Thankful People: mulalam, tgm603
    • CommentAuthorpk
    • CommentTimeJul 30th 2009
     
    If the check has bee stale and you are still expecting a claim from the payee, then the credit should go to Other Payables or Accrrued Expenses Payable.
    As explained above, it cannot be credited back to A/P due to reconciliation issue.
    Thankful People: mulalam, tgm603

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