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write stop payment letter to the banker & make a reverse entry in the books
Cheques pending in books of account for six months or more is regarded as stale cheques and can not be honured or paid by the bank when presented. There are vairous reasons that accounts for a cheque to be stale example, being misplaced or lost. Whatever the circumstance may be you need to find out from the supplier or vendor with whom the has been issued to in order to ascertain the reasons why the cheque has not been presented for payment. Afterwards you need to reverse the entry thus
Debit Bank Account
Credit Supplier Account
This will indicate that the supplier has not been paid and as such the amount will still be part of the total payables in the books of account.
While issuing Cheque when the purchases are made.
1) Expance A/C Debit
Creditor A/C Credit
2) Creditor A/C Debit
Bank A/C Credit
Now if the above cheque is lying unprecedented in the books of accounts for more than six months.
Bank A/C Debit
Creditor A/C Credit
Treatment of original cheque issued for the first time when the purchases are made. For example a stationery of $1000 were purchased. Then the journal entries would be as follows.
1st Entry
Stationery A/C Debit
Creditor A/C Credit
2nd Entry
Creditor A/C Debit
Bank/Cash Credit
Now if the above cheque is lying unpresented in the books of accounts for morethan six months, the following treatment should be made in the accounts.
Bank/Cash Debit
Creditor A/C Credit
As my opinion cheques should not be so long outstanding, to avoid such circumstances we should regularly prepare the bank reconciliations and followup with the vendors who are not presented the cheques for payment.
