There are times when a customer related cash receipt or disbursement will hit the customer side but not the General Ledger side, or vice versa. This document explains the proper procedure for correcting these problems.
Note: When the customer side is referred to, it can also apply to the Broker or Lienholder involved, if any.
This document is divided into the following sections:
Immediately following an error, lockup, loss of power, or error when running the Trial Balance report, run a Validate Accounts Receivables Report (located under Accounting, Month-End, Month-End In-Balance Checks, Accounts Receivable ). An error will appear on the report if there is a "cash crash." Check the following:
Note: Do not rely on the customer detail screen that shows the last few transactions entered. You must view Transaction History Balance Forward and Open Item and look for the transaction on these lists.
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You may want to attach an accounting note to the correcting entry to explain why this was done, or note the reason in the entry description. Run a Validate Accounts Receivables Report (located under Accounting, Month-End, Month-End In-Balance Checks, Accounts Receivable ) after fixing the damaged entry to ensure that the Year to Date is in balance.
Note : Errors may still appear on the report after the balance correcting entry is made. The problem has been corrected if the current period and year to date are both in balance.
Enter a Journal Entry to DEBIT the cash account and CREDIT your Accounts Receivable account for the amount that hit the customer side but not the GL.
Note: If the entry included PAYs that affected more than one customer, the journal entry can be for the total of all PAYs, or you can enter a separate journal entry for each PAY.
Enter a Journal Entry to CREDIT the cash account and DEBIT the accounts receivable account.
Enter a Journal Entry to DEBIT the cash account and CREDIT the accounts receivable account. This will reverse the check on the GL side without affecting the customer side. Now re-enter the disbursement as normal.
Note: For the rest of the current accounting month, errors will display on the Validate Accounts Receivables report for each client who was involved with the cash crash. There will also be an error listing the correcting journal entry. This is normal and the error listing will clear when you close the current accounting month.
The error will look similar to those listed below:
The report period difference is=$ the amount of your out of balance
|67174||10||D||1231||1||1||1||110||01/12/00||Correct Dep #21||500.00||0001|
If there are entries in the cash receipt or disbursement that were not affecting client accounts, they may also need to be dealt with. If, after running a Status of Accounts, you determine that the receipt or disbursement did not hit the GL, you should run a Trial Balance sheet to make sure that there are no out of balance entries in the system. Then you should re-enter any items not affecting client accounts as normal receipts or disbursements, or include them as separate lines on the correcting journal entry.
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Follow the instructions outlined in the Validate Cash Differences document to correct the running balance in your cash account.
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Last Revised: February 19, 2008 02:24 PMSWE1964