How do I make a journal entry for uncleared checks, and why do they matter?

Uncleared cheques/checks are those which have not been credited or collected by the bank in the customer's account until the date on which the Bank Statement is issued.

When a cheque is deposited into the bank for collection, it is immediately recorded on the debit side of the Cash Book.On the same day a cheque is deposited, the bank balance is increased.The bank will take some time to collect the cheque.When the amount was collected from the debtor's bank, the bank would credit the account.The bank balance in the Bank Statement would be less than the Cash Book if the cheque hadn't been collected.

The bank statement shows a balance of $10,000 on January 20.On the same day, a cheque for $5,000 was received from a debtor and was deposited into the bank for collection.The amount of the cheque is not collected by the bank until the 31st of January.

The Cash Book shows a bank balance of $15,000 at the end of the month.The balance is $10,000 according to the bank statement.Uncollected cheque is the reason for the discrepancy.Cash Book shows more bank balance when cheques are uncollected, uncleared or uncredited.

When cheques are uncredited, the Cash Book shows more bank balance than the Bank Statement.The amount of uncollected cheque will be collected and credited eventually.The amount of deposited cheque was not in our bank account on the date of the Bank statement.Bank Statement shows less bank balance than Cash Book.We have to credit the uncredited cheques in order to bring down the balance in the bank.