When there are outstanding checks that you require to reconcile in order to balance your accounts, you must clear every check to make sure the reconciliation process displays the right opening balance.
The reconciliation process will not function if you have not entered and cleared the particular outstanding checks. In case you lack a clearing account, you need to make a clearing account to use with the particular outstanding checks. After clearing account has been created and the checks are added to the register, it is possible to reconcile the checks in order to update the accounts in the right manner.
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But why it is important to clear out outstanding checks in QuickBooks? Read on to know more.
What happens When You do not Clear outstanding Checks in QuickBooks?
It is imperative to clear the outstanding checks in QuickBooks. If there are uncleared checks, deposit items, or debits, it can:
- Misrepresent the cash balance in your particular checking account
- Display the wrong net profit or loss for your account
Not to mention, the QuickBooks Balance sheet along with the Profit and Loss report will alter when you delete or void any kind of outstanding check or deposit. This change arises on the date when the deposit or check was actually posted. In case the date was in the close period, it will alter your financial statements.
Now, when you know why it is important to clear out outstanding checks in QuickBooks, you must learn how to do it.
How to Clear out outstanding Checks in QuickBooks?
Here are the steps to clear out the outstanding checks in QuickBooks:
1. Create a Particular Clearing Account
Step 1: Press the option Lists and choose Chart of Accounts. Press the button for Account and choose New.
Step 2: Choose the option Bank, and press Continue.
Step 3: Enter the Clearing Account in the field for Account Name. Press Save and Close.
2. Enter Checks
Step 1: Press the Banking menu and choose Write Checks.
Step 2: Add the information for the check. Such information will include check number, payee, check total, and date.
Step 3: Press Expenses and choose your particular Clearing Account from the list of several options.
Step 4: Press Save and New and finish the process till all the outstanding checks are entered. After it is complete, press Save & Close.
3. Reconcile Checks
Step 1: Press the Banking menu and choose Reconcile.
Step 2: Choose the right account from the Begin Reconciliation window.
Step 3: Add the Statement Date. Utilize the date when the account was actually created.
Step 4: Put the Ending Balance. Utilize the beginning balance from your given bank statement. Press Continue.
Step 5: Choose every outstanding check that was added previously. Ensure that the difference below the particular register says 0.00. In case it did not work, review the check two times and see the total added to the clearing account.
Step 6: Press Reconcile Now.
We hope that now you know how to clear out outstanding checks in QuickBooks. We have also highlighted why it is important to clear out outstanding checks in QuickBooks. This is very important if you want to run your business hassle-free.
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What is an Old outstanding Check?
When an outstanding check appears on the outstanding checklist which is a part of the company’s bank reconciliation, for a minimum of four months, it is an old outstanding check. In simple words, the company has issued the check four months before however, the check has not been cleared yet.
When the Accounting Period for Bank Reconciliation is usually Closed?
A closing date can be fixed in QuickBooks from the particular Company menu in the Set Closing Date option. In case the uncleared QuickBooks deposit or check was typed before the closing date, the period should be considered closed.
The period is considered closed if you provided the financial reports that comprised the uncleared check or deposit to any of the following individuals of the company:
Board of directors
The owner of the business
How can You Run a Report for the uncleared Checks in QuickBooks?
To find all the checks that are outstanding and are there in your books, you can run the reports in QuickBooks. It is very easy to run the reports in QuickBooks, all you need to do is follow certain steps in the prescribed manner.
There are a couple of methods that you can do to fund the particular unclear checks. For example, you can run the particular Bank Report that is fixed by the cleared status. You can also run the Bank Report that is filtered by the cleared status.
Also, you can access the Check Details report to find all the uncleared checks in QuickBooks.
Access the Bank Report that is sorted by the Particular Cleared Status
The best way to locate the uncleared checks is to run the particular bank report that is sorted by the cleared status. In order to run this report, you can follow the steps below and then determine how to run a report of uncleared checks in the accounting software QuickBooks.
Step 1: Go to the Accounting Menu in QuickBooks.
Step 2: Now, press on the option Chart of Accounts.
Step 3: Here you can look for the bank account that you wish to use for the report.
Step 4: Now, navigate to the Actions column and press on the drop-down menu situated beside the option for Account History.
Step 5: Now, once this is done, press the button for Run Report.
Step 6: After this, press on the Report period drop-down menu and select the button for All Dates.
Step 7: Go to the Sort drop-down menu and press on the option Clr and then choose descending order.
When all the steps are complete, you will find all the checks on the top end of the report which are yet to be cleared.