How to handle refunds given to customers but they never cash

I have a few client who either overpaid thier bill, or a discrepancy was found in delivery and a credit memo created for the adjustment.
I have sent checks to these customers explaining the purpose, some as far
back as 2004. But they have never cashed the checks. One customer due $2.59 is no longer in business and cannot be located.
What do I do with these long outstanding credits on file?
Additionally, I have some customers who have stated thier overpayment is "a tip". How do I handle the overpayment to get it off thier account as a credit and into my bank account as additional income without creating any issues?
Thanks Robert
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Check your state's *unclaimed property* laws. They generally have some standard number of years that you have to try, then remit the unclaimed property (a/p is among them) to the state. A refund is actually a payable, and technically it should show in your liability section (although it's impractical to do this inside the A/R accounts).

Easy. Create an income account for that purpose. The money is already in your bank, so credit the income account and debit their account.
--
Paul A. Thomas, CPA
Athens, Georgia
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