FAQ‎ > ‎

How to handle cancelled cheque created from opening?

posted Jul 12, 2009, 11:20 PM by Unknown user   [ updated Aug 10, 2009, 9:56 PM ]
There are a few reasons why a cheque is cancelled:
  • Cancelled by issuer - cheque issued with the wrong amount / receipient.
  • The sale transaction has been cancelled.
  • Cheque is bounced, this happens when the cheque amount is more than the bank balance.
  • Cheque is not banked within a period of time after issued (eg. 6 months).
There are 2 ways to solve a cheque cancellation that has been issued by the user usually to the supplier.


First method:

1. Do a Cash Adjustment to debit back the money into Cashbook. When a cheque is issued, the amount will be deducted from cashbook, so when the cheque is cancelled, users need to return back the amount to the cashbook.

2. Create a Supplier CM (backdate to before opening date). This is because the journal transaction for the credit memo will be removed later. Only CM that is created before the opening can be deleted.

3. Credit memo is required even though the cash adjustment has been done because cash adjustment will only affect the finance cashbook, it will not affect the GL cashbook.

  Dr Cr
Create Credit Memo
 CashbookAccount Payable

4. Delete the Journal Transaction for credit memo. Click here to learn how to delete the Journal Transaction. Only the Journal Transaction will be deleted, the credit memo will still remain in the credit memo listing.

5. Edit Set Opening Balance. Increase 'Cash & Bank' and 'Account Payable' by the cheque amount.


Second method:

1. Create a Supplier CM (same date as the cancelled cheque) to eliminate the cheque entry.


 Dr Cr
Create Credit Memo
 Cashbook Account Payable

2. Do a cash adjustment to insert back the amount of the cheque to the cashbook.


Note:
  • All the cheques keyed in the cash adjustment for the opening will be dated before the opening date. For example:
    • The opening date is 01-01-2009
    • The cheques that are created before the opening will be entered following the creation date which should be dated before 01-01-2009, for example 30-12-2008.
  • While doing the bank reconciliation, all the uncleared cheques will be left un-filed.

Please read Best Practices for Setting GL Opening.



Comments