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  #1  
Old 10-30-2004, 04:30 PM
MickMick MickMick is offline
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Post dated checks

Hi,

I run the books for a kindergarten. From each customer I recieve 12 checks, one for each month of the year.

How do I process these post-dated checks? (I guess it would go into something like "Notes Payable"). I don't want to use "Undeposited Funds", as I use that account for checks which I can deposit in the bank but havn't done so yet.

Also, when entering such checks in QB, what date to use? If I use the date on the check then the check will not show up current reports. If, on the other hand, I use today's date then I won't be able to track the actual date I'll be able to deposit them in the bank.

What so you think?

Thank you.
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  #2  
Old 10-30-2004, 04:52 PM
suzannemead suzannemead is offline
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Since you can't deposit the checks in the bank they have no value to you at this point, therefore they shouldn't be on any current reports. The date on the check is the date the check has value, not today's date. If you are looking at these checks as if they are promissory notes for later payment you should post them to a current asset account - but again, they have no value now that I can see.
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  #3  
Old 10-30-2004, 06:35 PM
gibbo gibbo is offline
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I agree with Suzanne. They actually have no real value at the moment. Therefore those that have not been deposited into your Bank account should not show on your reports. They are not actually an asset until the money is yours.
However, I assume that if you have billed the parents and they have given you the checks as payment, then you need to enter them so that it does not show a balance owing by the Customer. In this case you do need to make an entry that the payment has been made. But then the question is - how are you billing them? Are you billing them by year or by month? I assume you want to show the money when it is received and income in the period in which you receive it. So this actually comes back to how you are billing them and matching the payments to the bills.
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  #4  
Old 10-30-2004, 07:15 PM
suzannemead suzannemead is offline
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John - what do you think about "post dated invoices" to match the periods covered by the checks? Post the payments as I suggested to a current asset account and bring them in when the time comes. The invoices wouldn't show on current reports. Of course, as you asked, it all depends on how the billing is being done now.
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  #5  
Old 10-31-2004, 04:50 AM
gibbo gibbo is offline
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What I think I would do if I was in this situation is this:
Using Suzanne's idea, I would make out a series of Invoices, dated as I want the Income to be reported. This would suggest monthly and post-dated. I would then enter a series of Payments, but all dated now, for the series of cheques I had received. These would be applied to the relevant Invoices. But I would post the payments to an Asset Account. When I was actually banking the payment, I would transfer it from the Asset Account to my Bank Account. This allows me to show Income as I need it, but keep the money away from the Bank until I actually deposit it. While this may not be the strictly correct way of addressing post-dated cheques, it would seem the best way of tracking the whole thing.
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  #6  
Old 10-31-2004, 05:54 AM
MickMick MickMick is offline
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Post-dated checks

I agree with you. I MUST enter these checks somewhere as these are IOU's made out to the company and therefore have real value, even before I deposit them in the bank. Regarding your second suggestion, wouldn't posting all Payments with today's date while having post-dated invoices made out distort reports in favor of assets or income?

I guess it boils down to deciding when exactly the transaction is made (the "sale" of tuition), and in what chunks it is sold (one yearly chunk or 12 monthly chunks).
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  #7  
Old 10-31-2004, 08:13 AM
suzannemead suzannemead is offline
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I understand the concern with dating them"now", but you want them entered. They would go into an asset account and not be used as actual payments until needed. Then you would post them as payments and remove them from the asset account where they have been resting. Use your Make Deposits screen and use the "From Account" column to pull them out of the current asset account. You would be using today's date to show when the checks/promises were received and a future date for the actual deposits. On a balance sheet you will see the Customer Promissory Note (or whatever you want to call it) listed with current assets - but that is what you say you want. This way you know exactly what is owed you. I still have doubts about the value of post-dated checks. If a customer moves or quits make sure you remove their amount owed from the account.
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  #8  
Old 10-31-2004, 12:02 PM
Joey Joey is offline
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The post dated checks go into a drawer or a safe, not on your books. There is no way to record them without creating a "Deposit" that's dated in the future. If you're invoicing monthly, memorize the invoices to be printed each month as part of a memorized "group". Then after you issue your invoices, drag out the post dated checks and record the ones that you can deposit today and apply them to the customer's accounts as normal. Put the rest of the stack back in the safe until next month. There is no reason to have them on your books at all and in fact, post dated checks are even illegal in some states. If the customer moved away, you would either give them back or destroy them anyway. You don't record things in QuickBooks that haven't happened.
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  #9  
Old 10-31-2004, 12:34 PM
MickMick MickMick is offline
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Hi Joey,

Can you really say that receiving an IOU is something that hadn't happen? I'm not sure about that. True, keeping these checks in the safe is one way to go, but I think post-dated checks actually have economic value (for example, I'm sure that if today I asked 80 cents on the dollar for them there would be plenty of buyers. In other words, they can be converted to cash, although probably for less than face value). In the life of a business entity this is certainly an event of economic significance. If we wish our accounting system to reflect economic reality then wouldn't you say we MUST record these checks?
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  #10  
Old 10-31-2004, 01:27 PM
Joey Joey is offline
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Hi Mick. In this country, as I said before, they are worthless until the date on the check and, in some places, even illegal. True, in your heart, you have received the money, but if you insist on recording that money, then our Uncle Sam wants his fair share of that money when you "receive" it, not when you actually earn it. Most small businesses here are on the Cash Basis for taxes. (I'll probably get flack for saying that but, I'm trying to make a point)And even if they are on the Accrual Basis, you can't record the Deposit until you can actually "deposit" the money into the bank. If you "sold" the checks, then you would be able to record the deposit of the funds you received for them because a negotiable transaction has occured then. Until then, NOT.
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  #11  
Old 10-31-2004, 01:59 PM
suzannemead suzannemead is offline
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Thank you, Joey. I assumed some pressure was being put to bear from owners or managers to show these items on the books and MickMick was "following orders". I think you best ined what we all were trying to say.
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  #12  
Old 10-31-2004, 05:19 PM
MickMick MickMick is offline
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Thank you. this discussion has been very helpful for me.
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  #13  
Old 11-16-2004, 02:52 PM
CarmanMan CarmanMan is offline
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Post Dated Cheques

I haven't done it in QuickBooks but in an earlier life I wanted to post PDCs to client accounts when they were received so that I would not send reminder statements at month end to those who had paid via PDC. I set up an asset account "Post Dated Cheques" and deposited the PDCs to this account after posting to individual client accounts. When the cheques came due for deposit to the Bank it was simple matter to DR the Bank and CR the PDC account.
For final year end reports we simply included the amount of the PDC asset with Accounts Receivable, which is exactly correct.
Like I said, I haven't done this with QuickBooks but beleive it would work if the PDC asset account were set up as a Bank Account.
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  #14  
Old 11-16-2004, 03:30 PM
Joey Joey is offline
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People can do any and all sorts of creative things in the program but that doesn't make them right or even legal. You can "make up" bank accounts that aren't there and even make deposits to them. Then you can credit the A/R accounts for customer accounts that you haven't even invoiced yet with payments that haven't been made because the checks are post dated. It's entirely up to you. You look at the various answers to your original question and make your choices. I would advise choosing something that you could live with if you were audited.
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