How to void a check from a previous (closed) period w/o affecting FS

You are on the right track, but stopped thinking too soon. Journal entry (or deposit) in the current period, then clear BOTH the journal entry AND the check on your next reconciliation.

That will work, except possibly for the tax man. He hasn't said if the check was for a deductible item or if his taxes are based on cash or accrual books. If the check is for something that was deducted on a cash basis return, he should void the check and file an amended tax return(s). If he is accrual, usually the tax agency will accept the change in revenue in the later period of the journal entry. The reason the check is voided may play a part in this as well and that may set the date the journal entry has to be made which could be a different closed period.

P.S. if it is a $10 check nobody cares, a $1,000,000 check and you better see the person who prepares your tax return for advice.

"!-!" wrote:

You must be kidding. If the taxpayer is that concerned with doing the absolute correct thing then they would forward the amount of the check over to their state. Its called the escheat law and most states have it.

Depends on why they have to void the check or course. Perhaps the payment wasn't owed in the first place?

Thanks...that will work. I often stop thinking too soon...and sometimes I keep thinking too long... ;-).

stp

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I understand that technically the void will have some (in this case minor) effect on the previous year's tax return, but not enough to go to the trouble of filing an amended return. Reason is that a check just never cleared the bank...and was either replaced later or the money wasn't owed in the first place. Just a clerical error of some sort. But I'm the fastidious bookkeeper type and I want to always keep my QB FS statements in alignment with the tax returns.

Thanks for all the feedback. Great group.

stp

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*** From what I read, QB 2006 is supposed to automatically do the journal entries to correct the books when voiding a check from a prior period so that the prior period trial balance will be unchanged and only the current period will be adjusted. That, of course, is assuming that the amount of the check is immaterial.

It's still kind of a kludge, but it beats having to do the entries yourself (or trusting someone else to do them correctly).

I used to work with a program in the DOS days (One-Write Plus) that gave you a choice of voiding such a check either in the prior period or the current period. No journal entries were generated and none were needed. If you chose to void it in a prior period, the prior-period trial balance would be changed. If you chose the current period (the usually desired choice), then the prior period would be untouched and only the current period would be adjusted.

Allowing the void to occur in a prior period (especially in a prior closed year) sometimes could and did lead to some interesting moments when doing a closing. It usually happened when a bookkeeper chose to void in a prior period, either by inattention or by not thinking through the consequences.

Steve

That's easy.

Create a dummy deposit in the current period. Offset it to the account the old check charged as an expense. Then clear the dummy deposit and the old check in the same period. Ideally you should first change the dummy deposit and old check to reference each other.

Mike Block - QuickBooks Tax Cut C.P.A. Intuit paid me to make QuickBooks better!

I remember One-Write Plus well ;-). Very nice program, actually. But Quicken/Quickbooks already had such marketshare I guess they couldn't make a dent.

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The One-Write program was marketed years before Quicken. When Quicken showed up it blew them out of the water.