How do I reconcile old checks that have never cleared the bank?

Question

I have checks dating back a couple of years that have never been cashed. They continue to show in my reconciliation screen. How do I reconcile these without messing up my totals? It's getting very frustrating, I hope someone can help.

Answer 1

Look into each cheque to see who the payee was. If he has been chasing for payment but the cheques was never cashed, the cheque's most probably lost, in which case you cancel that cheque and reissue a fresh one.

If the payee has been silent all this time, chances are the amount's too small or the company has forgotten about it. Find out what the original entry was and reverse it. E.g. if the cheque was originally for office supplies, to reverse it, you:
Dr Cash xxx
Cr Office supplies expense xxx

This way, you'll eliminate the cheque from the bank reconciliation.

Answer 2

Meaning, you recorded those checks as Collection without actually receiving its Value?

For sure, those checks are already STALE (check date more than 6 months old) or in layman's term, Expired. Those cannot be encashed anymore. Now, you have to determine from What transaction it resulted from. If it's a collection from customer, then you should adjust by Deducting your cash then Reviving the Receivables from that Customer.
You should be balanced by then.

However, if you are the One who issued the checks and whoever you issued it to not yet able to Encash the check from your bank account, meaning the actual Deduction of cash has not yet occured. That means also that you still have those 2 checks as Outstanding Checks, or checks not yet cleared in the bank.
Now, the fact that it is already Staled, then it has to be Reinstated into your Cash Balance. As you may recall, when you made the payments, in your books, you Reduce Cash and REduce Payables. To correct the items, you have to Revert this entry. Add back the cash, then Revive the Payables.

Answer 3

What software are you using to reconcile your bank account? Assuming it is QuickBooks, you would need to make an entry depositing the same amount the original check was written for. Put it in the same account that you used when you wrote the check. Then when you reconcile, check off both the check that never cleared and the deposit that you never really made in the bank. This will clear it off.

Answer 4

There is usually a statue of limitations on when a check expires. Most business checks expire in 6 months from date of check, most personal checks expire in 1 year. Check into this with your bank, state regulations.

If you are able to void a lot of these checks, it will make your books and cash account much more accurate.