Reconciliations
Debtors
Asset Owes the business money.
Internal control
• Adequate separation of duties with regards to debtor’s transactions.
• There should be policies in place which monitor the approval of credit for
potential debtors.
• When a customer applies for credit, their past credit track record should be
checked.
• Discount should be given for early payment (this will encourage debtors to
settle their accounts early).
• The debtors clerk must send out regular statements to debtors in order to
remind them of what they owe.
• Interest should be charged on overdue accounts (this will discourage debtors
from taking too long to pay off their debts).
Errors which may occur
Error How to fix it
An amount was not posted from the Correct the amount in the control
journal to the ledgers at all. account and the list.
An amount was incorrectly entered into Enter the amount into the control
the journal e.g. 3740 instead of 7340 account and the list. Too much – cr(-) or
too little – dr(+).
Amount correctly entered into the Enter the difference into the list only.
journal but incorrectly posted to the
debtors ledger.
Amount correctly entered into the Enter 2x the amount into the list only.
journal but posted to the wrong side of
the debtor’s ledger.
The journal was cast (added or totalled) If undercast – add, if overcast –
incorrectly, too much or too little. subtract. Enter in the control account
only.
The total of the journal was posted to Correct by entering 2x the amount in the
the wrong side of the control account. control account.
Journal was correctly totalled, but the Correct by entering the difference into
total was incorrectly posted to the the control account only.
control account.
Debtors age analysis
• Shows a breakdown of outstanding debtor’s amounts after the schedules
aging period, usually 3 months.
• Analysed to find out:
o Which debtor owes what amount and for how long.
o Which debtor needs to be given discount for early payment, charged
interest for late payment or handed over to the attorneys for collection.
Debtors
Asset Owes the business money.
Internal control
• Adequate separation of duties with regards to debtor’s transactions.
• There should be policies in place which monitor the approval of credit for
potential debtors.
• When a customer applies for credit, their past credit track record should be
checked.
• Discount should be given for early payment (this will encourage debtors to
settle their accounts early).
• The debtors clerk must send out regular statements to debtors in order to
remind them of what they owe.
• Interest should be charged on overdue accounts (this will discourage debtors
from taking too long to pay off their debts).
Errors which may occur
Error How to fix it
An amount was not posted from the Correct the amount in the control
journal to the ledgers at all. account and the list.
An amount was incorrectly entered into Enter the amount into the control
the journal e.g. 3740 instead of 7340 account and the list. Too much – cr(-) or
too little – dr(+).
Amount correctly entered into the Enter the difference into the list only.
journal but incorrectly posted to the
debtors ledger.
Amount correctly entered into the Enter 2x the amount into the list only.
journal but posted to the wrong side of
the debtor’s ledger.
The journal was cast (added or totalled) If undercast – add, if overcast –
incorrectly, too much or too little. subtract. Enter in the control account
only.
The total of the journal was posted to Correct by entering 2x the amount in the
the wrong side of the control account. control account.
Journal was correctly totalled, but the Correct by entering the difference into
total was incorrectly posted to the the control account only.
control account.
Debtors age analysis
• Shows a breakdown of outstanding debtor’s amounts after the schedules
aging period, usually 3 months.
• Analysed to find out:
o Which debtor owes what amount and for how long.
o Which debtor needs to be given discount for early payment, charged
interest for late payment or handed over to the attorneys for collection.
