Sales And Financing: Cash Reconciliation

Sales and Financing: Cash Reconciliation

As a new hire it is important that we are on the same page in regard to cash reconciliation. The following errors should be approached as listed.

1. The bank erroneously records one of our deposits as $2,000 when we in fact deposited $200.

This will usually be caught at the time of deposit; however it is possible that it will not be noticed until we receive our bank statement. This will be corrected during the bank statement reconciliation. This process is utilized to confirm that the company's records and the banks records are in agreement. The cash balance of the bank accounts and the cash account are rarely identical (Horngren, Sundem, Elliot, Philbrick, 2006, p. 240) An $1,800 deduction on the bank statement is necessary to balance the statement with the company's cash account.

2. A deposit is recorded by the company bookkeeper as $350 instead of $530.

Reconciliation is necessary to the cash and revenues. Correction is achieved with a $180 debit in the cash account and $180 credit in the revenues account. This will balance the account so that they are reconciled. This also will balance the bank statement with the company accounts.

3. The deposit slip indicated a $25 deposit but the bank caught the error and corrected the deposit to $250.

Nothing should need to be done here, as long as the cash accounts are correct and the deposit records are correct. The bookkeeper should check the bank ledger to make sure the same mistake was not repeated. If it was that a $225 correction is necessary.

4. A company check clears the bank for $225 when in fact it was for $255.

The bank made the error here. The records of the company should indicate the correct amount in the bank ledger.