Reconciliation: A Payment Recorded Too Small

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For an expense payment, the books debit Expense and credit Cash. If a 70-dollar payment was entered as 40, Cash was reduced by 30 too little and the expense increased by 30 too little. Correct the difference: debit Expense 30 and credit Cash 30. Keep this book error separate from deposits and checks that are only timing differences.

Worked example

Separate example: bank 300 + deposit 30 - outstanding check 20 = 310. Books 344 - unrecorded fee 4 - payment correction 30 = 310. The verified payment was 70 but entered as 40. The correction is 30, not another 70.

Separate example: verified payment 70 minus recorded payment 40 leaves a 30 correction. Debit Expense 30, credit Cash 30. Bank 300 plus 30 minus 20 equals 310. Books 344 minus 4 minus 30 equals 310. — Use source evidence to determine the direction and size of a correction.

Fictional studio / same closing date

All amounts are fictional dollars. Bank statement: 410; book Cash: 469. Deposit in transit: 60. Outstanding check: 35. Bank interest 2 and fee 6 are missing from the books. A separate cleaning payment of 72 cleared the bank correctly, but the books debited Cleaning Expense and credited Cash for only 42. The receipt confirms 72. No other differences, taxes or adjustments apply.

Question 1 What signed change to book Cash corrects the cleaning-payment error? Answer

Question 2 What is the adjusted bank balance? Answer

Question 3 What is the adjusted book Cash balance after all corrections? Answer

Question 4 Which entry corrects only the cleaning-payment error? Debit Cleaning Expense 72; credit Cash 72 Debit Cleaning Expense 30; credit Cash 30 Debit Cash 30; credit Cleaning Expense 30

Question 5 Should you subtract another 30 from the bank side for this book error? No; the bank already recorded the correct 72 Yes; every adjustment goes on both sides Yes; the outstanding check was wrong