Manually Reverse Posted A/P Check Procedure

When a posted A/P Check cannot be reversed using the Reverse Posted A/P Checks utility, it can be manually reversed in the G/L and in the A/P sub-ledger as follows:

1. In A/P Invoices create a new invoice for each A/P invoice that was paid by the incorrect check, and by distributing the expense as a positive dollar amount to the bank it reverses the incorrect check posting, recreates the AP invoice as unpaid, and puts the dollar amount back in the G/L bank in one step.
   • The action Credits the A/P control account in the G/L, and sets the invoice up again in the A/P sub-ledger to be correctly paid.
   • The first detail of the new A/P invoice should be a Debit expensed to the Bank to reverse the amount paid on the check.
   • If a discount had been given on the incorrect check, then the second detail line of the new A/P invoice should be a Debit to the Discount account to reverse any discount that may have been taken.

     In A/P Invoices enter this reversing invoice with the following information:

     INVOICE #

     Enter the original invoice # of the first invoice paid by the incorrect check adding a suffix of C to indicate that it is a correction.

     
     VENDOR #

     Enter the vendor number of the check issued.

     
     POSTING DATE

     Enter the date of the check issued, so this action will return the money to the bank on that same date.

     Note: If the date is NOT in the current month, it is recommended that this be reviewed with your accountant first before back dating it into a prior period.

     
     Details:

     SEQ 0001 - to reverse the amount paid on this invoice, by the incorrect check

     ACCOUNT #

     Enter the G/L Account number for the BANK which issued this check.

     DIVISION

     Enter the division corresponding to the incorrect check.

     AMOUNT

     Enter the amount Paid by the incorrect check on the first invoice as positive.
     When posted to the G/L, this will Credit Accounts Payable and Debit the Bank for the amount paid out, reversing the G/L postings.
     In the A/P sub-ledger, it will reverse the payment by setting up the invoice as unpaid in the Vendor's current account again.

     Note: This Amount may not equal the Original Invoice total if a discount was taken.

     
     SEQ 0002 - ONLY if discount had been applied

     ACCOUNT #

     Enter the G/L Account number for the Discounts Taken on A/P as defined in Default Accounts for this currency.

     DIVISION

     Enter the division corresponding to the incorrect check.

     AMOUNT

     Enter the amount of the discount taken on the invoice as positive.
     When posted to the G/L, this will Credit Accounts Payable and Debit the discount amount taken.

     
     INVOICE TOTAL

     The amount displayed as the invoice total should now equal the Original Amount of the invoice.

2. If multiple invoices had been paid by the "incorrect check" then create a new A/P Invoice repeating Step 1 for each invoice that had been paid with that check.
   The sum of these invoices should equal the amount of the incorrect check plus the discounts.

3. Post the invoice corrections in Post A/P Invoices.

4. Remove the A/P Check record from the Outstanding Checks file as it will never be cashed.

Note: The invoice numbers and amounts will be correctly reset in preparation for payment correctly, however the invoice posting dates will reflect the date of the check, and NOT the original invoice posting dates.
The use of the check date for invoice date is necessary in order to correctly reverse the check from the Bank account in the General Ledger.

The drawback of using the check date instead of the actual original invoice posting date is the effect on the Aging of the Accounts Payable as the invoices will now appear in the payment period, rather than their actual aging date.