A vendor you paid via Bill Payment lost the check. You need to re-issue the Bill Payment check, but it was in the last fiscal year and the books are now closed. You do not want to delete or void the check as this would cause problems. Therefore, you want to perform the following steps:
Find the Bill Payment within the Vendor that needs to be re-issued. Note the account or items affected, and use the same account to book a journal entry. Make a note within the memo of the original Bill Payment and re-issue the check noting the current period date and new check number by way of a journal entry.
It is not recommended to void a Bill Payment in a closed period. Voiding a Bill Payment could cause issues if it was used to purchase inventory, or pay a 1099 vendor.
Create a journal entry in the current period, debiting the same bank account and crediting the expense. To create a journal entry in desktop go to Company > Make General Journal Entries. To create a journal entry in online go to the Create icon > under the Other column click Journal Entry.
Journal Entry Example – Journal date 04/06/2019:
|Main Checking||$500||JE to clear ck #1071 in 2018;
reissued 4/06/2019 w/ ck #2776
The journal entry will reverse the activity in the current period. If the Bill Payment relates to a 1099 vendor, we recommend using a wash account (instead of the expense account) for the journal entry and re-issued check. Using a wash account will avoid overstating the amount paid to the 1099 vendor in the current period.
Now re-issue the Bill Payment with a check. Write a new check in the current period to the same bank and expense account that you used in the reversing journal entry in Step 2, so it washes in the current period. Make a note in the memo that it is a re-issued check for the original Bill Payment.
For example: Re-issued ck #1071 from 5/12/2018
When you perform the next reconciliation the outstanding Bill Payment from the closed period and the journal entry reversing the original Bill Payment in the current period should both be marked as reconciled. The new check issued in the current period will remain outstanding until cleared.
The net effect is no change to the closed period. Keeping your tax accountant and auditors from asking questions by providing a trail of activity that enables you to clearly identify what happened.
If you have any questions, please contact us using our form and ask for QuickBooks help in the message section!
Written by Ann Weaver
Posted in Business Advisory