Journal Entry for Voided Check

Voided check is the check that company has prepared and issued, but decide to cancel due to any mistake. The check will become invalid after the company voided the check.

Check is a promissory note that company uses to settle the payment with the supplier. It is the document that orders the bank to make payment of an exact amount to the person whose name is on the check. The bank will debit the issuer account and make payment to the payee.

The company may decide to void the check if there are some mistakes during writing or printing. Due to the security, the bank will decline to make the payment if the check has an indication of correction. It may be an indication of fraud when the check has the correction. There may be some wrong spelling of the payee’s name on the check, so the bank will not make payment.

When the company voided the check, they have to reverse the previous transaction. The company use check to settle the accounts payable with the supplier. It is also used to pay for the purchase or expense without going through the accounts payable.

After voiding the check, the company should keep the original check in a safe place such as a vault. The physical check should be stamped “voided” to prevent reuse or fraud. We have to ensure that the voided check will never be used or tried to use in any circumstance.

Journal Entry for Voided Check

Before the company makes any adjustment to the voided check, we have to look at the prior entry that company makes when writing a check.

The company is highly likely to use the check to settle the accounts payable. When issuing the check to supplier, the compnay reverses the accounts payable and credit cash at bank.

Account	Debit	Credit
Accounts Payable	$$$
Cash at Bank		$$$

So when the company voided the check, they have to reverse the transaction above. The cash will remain in the company account as well as the accounts payable. The company has to make journal entries by debiting cash and credit accounts payable.

Account	Debit	Credit
Cash at Bank	$$$
Accounts payable		$$$

On the other hand, if the company uses the check to pay for the purchase of assets or services. It is not possible to reverse the assets or service unless the supplier agrees, and it will be another different scenario. So when the check is voided, the company has to reverse back the cash at bank and credit the accounts payable which are the same as the above entry.

Example

Company ABC has issued a check to settle the accounts payable with supplier. The check is amount $ 50,000. However, the check was voided due to an error during printing. Please prepare a journal for the voided check.

ABC has issued the check to pay for the accounts payable. So during the check issue, company has recorded debiting accounts payable and credit cash at bank. They are settling the accounts payable with supplier.

However, the check is voided due to an error during printing. So it means the check will never arrive at the supplier office. The cash at bank will never be withdrawn by the supplier. So we have to reverse the prior transaction.

The journal entry is debating cash at bank $ 50,000 and credit accounts payable $ 50,000.

Account	Debit	Credit
Cash at Bank	50,000
Accounts payable		50,000

The transaction will add back the cash at bank that company reduces during the check issue. The accounts payable are also required to increase back to their original amount as well.