Should accounts payable set up an escheatment GL account to hold funds for checks that have not been cashed?


Yes, you should set up an escheat or unclaimed property (UP) account. When you have reached the determination that the uncashed checks are escheatable, do not void them, but mark a transfer via journal entry—leave a debit to the expense, and transfer the liability to the escheat liability account.

Once the amount has been escheated to the state, mark the checks in the liability account “escheated to state,” so that when you sort the population in the UP liability account, only those items still “open” will need to be addressed.  The balance on the GL liability account should correspond to the open items only.  The items previously resolved or escheated should not be counted in the liability total balance.  

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