Reconciliations Flashcards
Contra entries DE
Dr payables
Cr receivables
Contra entries
Cancellation of debt when supplier is also customer
Always cancellation in both accounts
Credit balances on receivables account (or vice versa) reasons
Customer has overpaid
Credit notes issued when goods already paid for l
Payment received in advance of raising invoices
Dishonoured cheque DE
Dr receivables
Cr cash
(Reverse the receipt)
Receivables account potential debit entries
Credit sales (less returns)
Dishonoured cheques
Refunds of credit balances
Receivables account potential credit entries
Cash received
Irrecoverable debts
Discounts allowed l
Contra
Payables account potential debit entries
Cash paid
Discounts received
Contra
Payables account potential credit entries
Credit purchases (less returns)
Refunds of debit balances
Supplier statements important to remember
Prepared from point for view of supplier
Receivables for suppler
So debit balances
Though credit for us
Supplier reconciliation system
- Match invoices and credit notes from supplier statement to payables ledger
- Investigate any unmatched amounts
Errors in supplier statement
Don’t correct our payables ledger
Error in payables ledger
Adjust
Timing differences: Adjust?
E.g. payment made just before year-end that hasn’t been recorded by supplier
Not an error
Don’t adjust
Bank statement debits and credits
Reversed
Because from their point of view
Main reasons for differences between bank statement and cash ledger
- Unrecorded items in ledger
- Timing differences
- Errors
