Chapter 10
Cash Controls
302
The bank reconciliation for outstanding cheques is shown in Figure 10.17.
HR Clothing
Bank Reconciliation
June 30, 2016
Ledger
Bank
Balance as per records
$2,600
$4,500
Less:
Outstanding cheques
Cheque #4 June 28
(400)
Cheque #5 June 29
(800)
Cheque #6 June 30
(700)
Reconciled balance
$2,600
$2,600
______________
Figure 10.17
No adjustment is required in the ledger account because the cheques are correctly recorded in the
general ledger but have not been cashed by the bank. The bank will eventually include them on
the bank statement.
Bank Errors
Although rare, it is possible that banks will make errors, such as charging the company incorrectly
with a cheque belonging to another company. In that case, the company’s ledger balance is correct
and the bank must correct the error.
Consider an example: when the bookkeeper receives the bank statement and compares it with
the company records, she notices that the bank processed a cheque for $800 on June 8, but the
company has no knowledge of the cheque.This is shown in Figure 10.18.
At that point, the bookkeeper calls the bank and discovers that the cheque belongs to another
bank client.
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
