ReconciledrillBook errors
A book error is a mistake in the company's own cash records, such as recording a 540 check as 450 or posting a deposit twice. Adjust the book side of the reconciliation by the amount that brings the ledger to the correct figure, and post a correcting journal entry for the same amount.
Syntax
Book side: if ledger cash is too high, subtract the difference; if too low, add it. Entry corrects Cash and the account originally used.| Part | What it is |
|---|---|
Check recorded too low | Cash is overstated; subtract the difference, Cr Cash |
Check recorded too high | Cash is understated; add the difference, Dr Cash |
Deposit recorded too low | Cash is understated; add the difference, Dr Cash |
Deposit recorded twice | Cash is overstated; subtract the duplicate, Cr Cash |
Examples
Check #118 to a supplier written for 540, recorded in the books as 450Result: Books deducted 90 too little; subtract 90 on the book side. Entry: Dr Accounts Payable 90 / Cr Cash 90.
Customer receipt of 1,250 recorded as 1,520Result: Books added 270 too much; subtract 270 on the book side. Entry: Dr Accounts Receivable 270 / Cr Cash 270.
Rent check of 800 recorded as 880Result: Books deducted 80 too much; add 80 on the book side. Entry: Dr Cash 80 / Cr Rent Expense 80.
Common mistakes
- Adjusting the bank side for a book error: the bank processed the real amount; the books are wrong.
- Correcting Cash only: the other side of the original entry (payable, receivable, expense) is also wrong and must be fixed.
- Posting the full amount instead of the difference: the correcting entry is for the error, 90, not the whole check, 540.
Practice Book errors
These drills check your answer on live data, free, no account needed.
- Digits swapped in the booksClassify every line, enter the correction for any error, then the adjusted bank and book balances.
- A deposit recorded shortClassify every line, enter the correction for any error, then the adjusted bank and book balances.
- Correcting a book errorClassify every line, enter both adjusted balances, then choose the journal entry the company must record for each item that affects its books.
Questions
Which side does a book error go on?
The book side. The direction depends on whether the ledger cash balance ended up too high (subtract) or too low (add).
What is the journal entry for a book error?
Reverse the mistaken part: debit or credit Cash for the difference and put the opposite entry in the account used originally.
Related
- Transposition errorA transposition error swaps two digits, such as 540 entered as 450. The difference is always divisible by 9, which makes it quick to spot in a reconciliation.
- Deposit recorded for the wrong amountWhen a deposit is recorded in the cash book for a different amount than the bank received, the books are off by the difference. Which side, which entry.
- Check recorded twiceA check entered twice in the cash book understates cash by the duplicate amount. Add it back on the book side and reverse the duplicate; same for a deposit.
- Correcting entryA correcting entry fixes a mistake in a posted transaction: reverse the wrong part and record the right one, or post the net difference. Examples by error.