Ideal Online Documentation

24550 A/P PROCESSING
AP2-03 Cheque Reversals

 

PURPOSE

 

From time to time you may issue and post a cheque and subsequently discover that you need to cancel or reverse it. This article explains the procedure for reversing a cheque.

 

 

PROCEDURE

 

For an example of the normal course of events let's receive an item into inventory.

 

The Receipts Program updates the accrual sub-ledger file by adding a receipt number to correspond to the packing slip and performs the following G/L postings based on the amount of the receipt:

 

 

DR Inventory account

CR Accrued Payables account

 

Using the A/P Invoice Posting program you would specify the receipt number to create an A/P invoice sub-ledger file detailing the receipt and invoice information. The Invoice Posting program then deletes the accrual sub-ledger file and performs the following G/L postings based on the amount of the invoice:

 

 

DR Accrued Payables account

CR Accounts Payable account

 

Using the A/P Cheque Printing program you update the outstanding cheques file to include the cheque number and amount. The Cheque Printing program also deletes the invoice sub-ledger record and performs the following G/L postings based on the amount of the cheque:

 

 

DR Accounts Payable account

CR Bank account

 

 

To reverse this hypothetical payment you would proceed as follows.

 

Using the A/P Invoice Posting program create a Credit Invoice

  • Enter the same data as on the original invoice, but with negative amounts
  • Specify the cheque number that was issued for the original invoice
  • Enter the G/L code for the Accrued Variance account (this credits this account) for the amount of the cheque (you do not need to enter a negative amount here, since the system already knows it is negative)

This creates and removes an A/P invoice sub-ledger file and affects the G/L as follows by the amount of the cheque:

 

 

DR Accounts Payable account

DR Bank account

CR Accrued Payables account

CR Accounts Payable account

 


Post a new invoice

  • Enter the same data as the original invoice
  • Do not specify a cheque number or a receipt number
  • Enter the G/L code for the Accrued Variance account (this debits this account) for the amount of the invoice

The A/P Invoice Posting program creates an A/P invoice sub-ledger file detailing the invoice information. The Invoice Posting program then deletes the accrual sub-ledger file and performs the following G/L postings based on the amount of the invoice:

 

 

DR Accrued Payables account

CR Accounts Payable account

 

 

Using the A/P Cashed Cheque Entry program enter both the original and the reversed cheques as cashed.