GRADE 11
ACCOUNTING
MODULE 1
LESSON 9
RECONCILIATIONS

Businesses that buy & sell on credit keep a
Creditors Ledger which contains the individual
accounts of each creditor
RECONCILIATIONS

Creditors Ledger contains:
 Opening balance
 Invoices issued by the creditor for purchases made
 Returns
 Allowances
 Payments made to the creditor
 Discounts received
A copy of the account is received from the creditor
supplier at the end of the month
 Presented in 3 column format instead of T account

RECONCILIATIONS

Creditors list is prepared @ end of month
 Summary of all balances owed
 Balance of list must balance with Creditors control
balance
 Can draw up control balance from list balances

If want to know how much we owe an individual
creditor, check individual Creditors Ledger

If want to know the total you owe all your creditors
you look at the Creditors Control account
RECONCILIATIONS

For control purposes the control accounts must
always be in balance with the Creditors List
 In many instances they don’t balance
○ Have to investigate
 Examples of reasons why:
○ Errors in posting (in journals, to ledgers or to control
accounts)
○ Wrong amounts entered when posting
○ Transactions have not been processed
 Errors or omissions may impact:
○ Control account
○ Individual account
○ Or BOTH
RECONCILIATIONS - example
CREDITORS LEDGER OF RAYNE WHOLESALERS
CREDITOR: SWART SUPPLIES
Date
May
Details
F
Dr (-)
Cr (+)
Bal
1
Balance
b/d
8
Invoice no.25
CJ
10
Cheque no.100
CPJ
1 100
8 200
15
Debit note no.12
CAJ
500
7 700
25
Invoice no.33
CJ
28
Cheque no.110
CPJ
4 200
5 100
3 600
4 200
9 300
11 300
7 100
RECONCILIATIONS - example
STATEMENT FROM SWART SUPPLIES
ACCOUNT: RAYNE WHOLESALERS
Date
May
Details
1
Balance
8
Invoice no.25
10
Receipt no.88
Dr (+)
Cr (-)
Bal
4 200
5 100
9 300
1 100
8 200
Discount allowed
100
8100
15
Credit note no.20
500
7 600
25
Invoice no.33
3 600
11 200
28
Invoice no.34
600
11 800
According to SWART SUPPLIES we owe them R11 800 but
our Creditors Ledger shows that we owe them R7 100
The differences need to be determined and corrective action
taken
RECONCILIATIONS - example

PROCEDURE FOR RECONCILIATION
 Mark off on both accounts all amounts that are
the same.
○ Remember the amounts will be on opposite sides
 Determine why the other entries do not agree and
correct them
○ Problems in the Creditors Ledger corrected in our
books and affect the Creditors Ledger
○ Problems on the Statement are corrected on the
Creditors Reconciliation Statement
RECONCILIATIONS - example
CREDITORS LEDGER OF RAYNE WHOLESALERS –
CREDITOR: SWART SUPPLIES
Date
May
Details
F
1
Balance
b/d
8
Invoice no.25
CJ
10
Cheque no.100
CPJ
1 100
8 200
15
Debit note no.12
CAJ
500
7 700
25
Invoice no.33
CJ
28
Cheque no.110
2
Dr (-)
Cr (+)
Bal
4 200
5 100
9 300
3 600
CPJ
11 300
4 200
7 100
STATEMENT FROM SWART SUPPLIES
ACCOUNT: RAYNE WHOLESALERS
Date
May
Details
1
Balance
8
Invoice no.25
10
Receipt no.88
Discount allowed
15
Credit note no.20
25
Invoice no.33
28
Invoice no.34
Dr (+)
Cr (-)
Bal
4 200
5 100
1
3
9 300
1 100
8 200
100
8100
500
7 600
3 600
11 200
600
11 800
RECONCILIATIONS - example
1.
Discount of R100 on statement
1. Enter the discount in the GJ
2. Dr Swart Supplies, Cr Discount received
3. Post to CL
2.
Cheque no.110 for R4 200 in ledger
1. Subtract from total on statement
3.
Invoice no.34 for R600 on statement – it
came to our attention that these goods were
sold to Sayne Wholesalers and not us
1. Subtract the amount from the statement total
RECONCILIATIONS - example
CREDITORS LEDGER OF RAYNE WHOLESALERS –
CREDITOR: SWART SUPPLIES
Date
Details
F
May
Balance – BEFORE ADJ
b/d
Discount received
GJ
28
1
Dr (-)
Cr (+)
Bal
7 100
100
7 000
CREDITORS RECONCILIATION STATEMENT at 31 May 2008
Details
Bal
Balance – BEFORE ADJ from Statement
11 800
Cheque no.110 outstanding
2
(4 200)
Invoice no.34 error
3
(600)
Balance as per ledger
7 000
or
CREDITORS RECONCILIATION STATEMENT at 31 May 2008
DR
Balance as per S.Swart’s statement
CR
11 800
Cheque no.110 outstanding
2
4200
Invoice no.34 error
3
600
Balance as per Creditors Ledger account
7000
11 800
11 800