Chapter 10
Cash Controls
301
Outstanding Cheques
The next reconciling item to consider is
outstanding cheques
. An outstanding cheque (issued by the
company) is one that has been recorded in the general ledger, but has not been recorded on the
bank statement.This can happen because after the company records the cheque, it is mailed to the
supplier. The supplier then records it in its books, prepares the deposit and takes it to the bank.
The process can take several days, so the cheque mailed on June 29 may not appear on the bank
statement until July 2 or 3.
Consider an example: three cheques have been recorded in the ledger between June 28 and 30, as
reflected in Figure 10.16. None of these cheques have been processed by the bank by June 30.The
cheques are therefore outstanding.
To reconcile the ledger account with the bank statement, we must treat the cheques as if the
transaction had been completed by the bank (i.e. deduct the amounts from the bank record).
GENERAL LEDGER
Account: Cash
GL. No. 101
Date
Description
DR CR
Balance
Jun 1 Opening Balance
5,000 DR
Jun 2 Cheque #1
300 4,700 DR
Jun 3 Cheque #2
500 4,200 DR
Jun 10 Cheque #3
700 3,500 DR
Jun 15 Deposit
1,000
4,500 DR
Jun 28 Cheque #4
400 4,100 DR
Jun 29 Cheque #5
800 3,300 DR
Jun 30 Cheque #6
700 2,600 DR
Bank Statement
June 1–June 30, 2016
Date
Description
Withdrawal Deposit Balance
Jun 1 Opening Balance
5,000
Jun 2 Cheque #1
300
4,700
Jun 3 Cheque #2
500
4,200
Jun 10 Cheque #3
700
3,500
Jun 15 Deposit
1,000
4,500
______________
Figure 10.16
