Learn how to deal with uncleared cheques when:
You are first setting up Kashoo AND
You had previously used a different accounting system
We all know that cheques don’t get cashed right away. Usually, this is a great thing, since money stays in your bank account longer. However, when it comes to accounting, uncleared cheques present a bit of a problem.
What’s the problem you ask?
Well, cheques that have not cleared (i.e. have not been cashed), cause the balance of your accounting system records to be different from your real bank account balance.
For example, let’s say a $500 cheque is written to AdWorks Advertising on December 20th, 2012. This cheque would be entered into your accounting software on that date and deduct $500 from your accounting system’s bank account balance. But in reality, your bank account still has that 500 in there, since the cheque has not been cashed yet. So there’s a $500 difference between your real bank account and your bank account records in your accounting system. Usually this is no problem, it is just a reconciling item. When the cheque is cashed, this reconciling item disappears.
However, if you are moving from one accounting system to another, this discrepancy is a problem. This is because when you move to Kashoo, the only information you initially bring over from your previous accounting system would be your accounts and their balances (i.e your trial balance). A trial balance does not contain details of individual transactions that took place in your previous accounting system, it’s simply a summary of all your account balances. That trial balance won’t show that there was a deduction for $500 for a cheque that has not been cashed included in the balance.
To make your accounts in Kashoo reflect your real bank account balance, follow these 2 steps:
Step 1
Add the uncashed cheque amount back to the bank balance. This will cause your records in Kashoo to match those in your bank.
Click on Journal Entries and select Enter Transfer.
Enter the following:
Amount: $500 Withdraw From: Uncleared Checks. You’ll need to create an "Uncleared Checks" account by clicking on Add Account.
And then add this information:
Name: Uncleared Checks Description: Uncashed checks from the previous accounting system Type: Cash Click on Add
Deposit Into: Bank Account
Date: December 31, 2012 (Note: In this example this date is the same date as the trial balance / opening balance date)
Memo: Adding uncashed cheque back to bank balance
Step 2
When the cheque clears your real bank account January 20th, 2013), enter a transaction to take money out of your bank account balance in Kashoo. Click on Journal Entries and select Enter Transfer and enter the following information:
Amount: $500
Withdraw From: Bank Account
Deposit Into: Uncleared Cheques
Date: January 20, 2013
Memo: Uncashed cheque from previous accounting system has been cashed
Notes
When you go to reconcile your bank account, the transaction from Step 1 needs to be manually cleared (since this transaction didn’t really occur in your real bank account).
If you imported your bank transactions into Kashoo (whether via automatic bank feed or upload), look for the transfer from step 1 in the Entered Transactions section. Once you find the transfer, click on the check box next to the sentence "No match found. Select to copy this transaction to the Bank Statement."
If you did not import your bank transactions into Kashoo, simply find the transfer from step 1 and check it off.
