The company has checks outstanding going back to 2002. What would be the proper treatment for these checks? Should they be voided or reported as unclaimed property? What is the proper accounting treatment if they are voided this year? Does anyone know what the Massachusetts requirements are for treatment of old outstanding checks?
Your help is greatly appreciated.
2007-07-26 05:54:32 · 4 answers · asked by Amy 1 in Business & Finance ➔ Other - Business & Finance
Any unpresented cheque will appear in your bank reconciliation. As soon as it expires (usually after 6 mths) you write it back to accruals because the statute of limitations has not run out and the payee can come back anytime and ask for a replacement cheque.
2007-07-26 16:34:49 · answer #1 · answered by Sandy 7 · 0⤊ 2⤋
In general, states have laws that require you to turn over the funds represented by uncashed checks. The official term is "escheatment," I believe (see "escheat" in wikipedia.com). For example, if you have an old payroll check that was never cashed, you would submit those funds to the state in that employees' name. If the employee ever checks with the state, she/he can collect the money with interest. Same thing with a supplier that never cashed a check - that money should be turned over to the state in the supplier's name. If the supplier is out of business, a bankruptcy court may check for funds held by the state. On the other hand, you may check with your state for money held in your company's name - you may be able to collect something. Most businesses are not very good at following these laws and audit and enforcement is usually low. Every state law is different, so check with the Commerce Department or the State Treasurer of MA.
2007-07-26 06:07:46 · answer #2 · answered by brwzx 1 · 2⤊ 0⤋
They should be reported and submitted to the state as escheatment/unclaimed property. They should not be voided, instead at least annually you submit them to the Unclaimed Property Office.
If you void a check, you must restore the Accounts payable by debiting cash and crediting Accounts Payable.
2007-07-26 06:03:56 · answer #3 · answered by Pinoyako! 2 · 1⤊ 0⤋
Most banks won't honor a check that's stale-dated (more than 6 months old).
2007-07-26 05:57:46 · answer #4 · answered by Anonymous · 0⤊ 0⤋