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clearing an uncashed check

Forum|Forum|2 years ago
April 9, 2024
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Hello. We are using 2018 QB Desktop Pro in our auto repair shop. Back in July 2022, we performed a repair, and our Customer prepaid the estimated amount with a debit card. We completed the repair, with the final cost being $176.21 less than the estimate. The vehicle was ready to collect on a Friday, and she was not able to come to the shop during open hours because of her work schedule, and she needed the vehicle for the weekend. We could not issue a refund to her debit card account because the card was not present. She requested that I issue a check for the refund, and place it along with the paperwork and keys in her vehicle, and she would collect it all that evening. I wrote and entered into QB the refund check, she collected the vehicle and paperwork (including the check), and then she disappeared. She never cashed or deposited the check, and we have not been able to contact her.

So, I have this outstanding refund check that I need to deal with, that shows up at the top of the list of transactions every time I reconcile the checking account. She requested that form of refund but never cashed/deposited it, and it is long since out of date, so how do I deal with it without messing up the books for that year?

QuickBooks Desktop

Best answer by Rainflurry

@Hawkeye14

All you need to do is to create a deposit dated 2024 in QB and assign the deposit to an income account (it's income to you because the customer never cashed the check). Then, the next time you reconcile, clear the deposit against the old outstanding check and you're all set.

JenoP

Thanks for taking the time to reach out to us, Hawkeye14. I understand that uncleared transactions can pose some challenges during the reconciliation process.

Since you're unable to reach the payee, you'll want to consider voiding the check through a journal entry. Here's how:

Go to the Company menu and select Make General Journal Entries.
Select your bank in the Account column and enter the amount under the Debit section.
Choose the account you used to enter the refund and put in the amount in the Credit section.

Alternatively, you can create a bank deposit to move the amount back to your bank. This approach will ensure that the funds are not lost and the transaction is cleared out during reconciliation.

However, I would advise consulting your accountant before proceeding with these options as it may have implications on the previous reconciled period.

Let me share these articles for additional details about these options:

I also want to share these articles for additional guidance and reference when working in QuickBooks:

The Community is always here in case you have follow-up questions, Hawkeye14. We're open 24/7 to offer our when you need it.

H

Hawkeye14Author

Thanks for your reply, jenop2. I considered a GJE, but I am wondering whether it will mess up the original transaction, which in turn could mess with the refund and other things for the year 2022. Additional details:

Since she wanted to prepay, I created an Invoice for the repair (estimated to be $467.75), and then used the Receive Payments function to apply her debit card payment of $467.75, when she dropped off the vehicle. During the repair, we realized we didn't need all the parts I had included on the estimate. I corrected the paid Invoice to $291.54 to reflect the actual cost of the repair. Her payment of $467.75 thus became an overpayment, which triggered QB to ask if I wanted to create a Credit Memo or Issue A Refund, in the amount of $176.21. She did not want a Credit Memo, and requested that I give her a check instead of trying to figure out a way for her to get her debit card to us (she had no credit card, and we cannot process debit card with PIN transactions unless the card is present to be read by the terminal). So in the Issue A Refund window, I entered a Refund in the form of a check from my checking account, and then wrote out check #6222 for $176.21 and put it with her paperwork inside the vehicle. She collected the check but never took it to a bank for cash/deposit.

So now is QB holding that Refund in some kind of "clearing account" that lists checks that have not yet been processed by my bank, that I select from every month whenever I reconcile the checking account with my bank statement? If I simply Void the check, then it will not show up during reconciliation any more, but QB will then think that I still owe her a refund. If I "void" the Refund with a GJE as I think you suggest, will that leave Refund Check #6222 still recorded as the refund of her overpayment? And if so, what is the name of the "clearing account" that it is being held in, and can I access it with a GJE? I want to figure out a way to cancel the amount of the Refund (i.e., transfer it back into my checking account within QB) today (meaning dated now) without cancelling the check that QB recognizes as the refund for her overpayment. I don't want to mess with a two year old transaction if I can avoid it. Does that make any sense?

J

jeanbiverly_

I've got your back, @Hawkeye14.

After you void the refund by creating a General Journal Entry (GJE), it will still be recorded as an overpayment refund on your customer's account. The refund won't be deleted; it will only be offset.

Also, the name of the clearing account that it's being held in depends on how you'll name it upon setting it up. Additionally, you can access all accounts when creating a GJE.

Moreover, the way to cancel the refund amount without canceling the refund check for the overpayment is by creating a GJE. For more guidance on the offsetting process, you can consult your accountant.

Just in case you want to display a more detailed breakdown of amounts and accounts that are not visible from the transaction, you can check out this article for guidance: View the Transaction Journal report in QuickBooks Desktop.

You can always get back to this thread if you have any follow-up concerns regarding creating a GJE for your customer. We'd be glad to help. Stay safe!

RainflurryAnswer

@Hawkeye14

All you need to do is to create a deposit dated 2024 in QB and assign the deposit to an income account (it's income to you because the customer never cashed the check). Then, the next time you reconcile, clear the deposit against the old outstanding check and you're all set.

H

Hawkeye14Author

Hello Rainflurry. Good idea, looking at it from the other direction. I entered a deposit to PNC Checking, attributed to the Customer's account, assigned to Sales Income, dated to be within the Reconcile period I'm currently working on (so it would be with that group of cleared items in the Register), and the results appear to be clean. No numbers changed regarding the original transaction from 2022, the amount is captured as income, and I have matching transactions to clear in Reconcile with no apparent adjusting of other accounts. I printed a copy of the deposit to add to the paperwork from the original transaction so I can trace it back if necessary. Thank you, and the other responders, for your help!

C

claritywater

I have read the thread and I'm still confused how to do this. In the bank Deposit Screen, at the top is "Deposit To". Would that be the bank that I wrote the check out of (ex:chase) or an income account you mentioned such as "sales income"?

Below that is "Received from": ?? and "From Account":?? The explanation here isn't specifying what is going in each location. Is the Customer going in Received From? Is Sales Income going in "From account"?

The old refund check is still showing up to reconcile in the bank account and I want to clear it out of there.

The Customer's open balance report is showing the overpayment amount (negative) on one line and the refund check amount (positive) on a 2nd line, making them at zero as it should. I do not want to void the check and reflect that we still owe it to the customer since it was errors on the customers part at the time 2 years ago and been resolved with them but these transactions are still here.

Please include the details to fix. Thank you.

S

SMC14

In most states, that money needs to be sent to the State Treasurer's office as unclaimed money; after all, it's not your money, it's the client's money. To comply with state and federal laws, companies will send unclaimed money to the State for as little as $0.01 because they don't want to get embroiled with an expensive claim and lawsuit with customers.

H

Hawkeye14Author

The end of the story:

Rainflurry's suggestion cleanly removed the check without affecting 2022 data. Ironically, I had placed her file in a folder to report as Unclaimed Funds later this year, but she came in about a month ago with a different vehicle that needed repair. As I was preparing her Invoice after this repair, I created a Credit Memo in the amount of the lost check (attributed to Parts since that amount was for a part that we ended up not using but that she prepaid for), and offered to apply it to the current Invoice. She was completely unaware, and pleasantly surprised, and said that she lost that 2022 paperwork and didn't even remember seeing a check. So, problems solved all around. Thanks again to all who chimed in.

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