The Missing Receipt and the Month-End Crunch
You are the bookkeeping assistant at a small hardware retailer. On the last working day of the month, the owner hands you a shoebox containing 41 supplier invoices, 12 of which are missing a date, 6 of which show a total that does not match the sum of the line items, and 3 of which are handwritten with no supplier tax number. The owner says: "Just enter them all at the totals shown so the bank reconciliation balances tonight - we can tidy up next month." The bank statement shows 38 cleared supplier payments totalling 214,600 in the local currency. The accounts payable ledger currently shows 39 entries totalling 219,150. One invoice for 4,550 appears twice in the ledger under slightly different supplier name spellings. Month-end reporting is due to the bank tomorrow morning.
1. Should you follow the owner's instruction to enter all invoices at the totals shown? Justify your answer and state what you would do instead.
Read the worked answer
No - entering unverified totals to force a balance defeats the purpose of the records.
Reasoning:
- A bookkeeping entry must be supported by a valid source document. Six invoices with arithmetic errors and twelve with no date are not reliable evidence of a liability.
- Forcing the ledger to match the bank hides the real discrepancy rather than resolving it. The 4,550 duplicate is a genuine error that will distort payables and the expense figures used for pricing and tax.
- Deliberately posting unsupported figures to meet a deadline is a misrepresentation of financial records, even if the intent is only to "tidy up later."
What to do instead:
- Reconcile the bank first: match the 38 cleared payments to ledger entries and isolate the unmatched items.
- Remove the duplicate 4,550 entry (confirm which spelling is correct against the supplier's own documents).
- Put the 6 arithmetic-error and 3 no-tax-number invoices on a hold list and query the suppliers in writing.
- Post only invoices that are complete and arithmetically correct; record the rest as "pending verification" in a separate schedule, not in the ledger.
- Tell the owner plainly that the reconciliation will show an explained difference this month, and give them the schedule so they can report accurately.
2. The ledger total is 219,150 and the bank shows 214,600. After removing the duplicate, what explains the gap, and how would you present it?
Read the worked answer
Removing the 4,550 duplicate brings the ledger to 214,600 - exactly the bank total. That is a red flag, not a comfort: it means the only identified error happens to close the gap, so you must check that nothing else is offsetting it.
Steps:
- Confirm the duplicate is genuinely one invoice recorded twice (same invoice number, date, amount) and not two separate deliveries.
- Re-perform the subtraction: 219,150 − 4,550 = 214,600. Show this working in the reconciliation file.
- Test for compensating errors - e.g. an omitted invoice offset by a transposed figure - by ticking off each cleared bank payment to a ledger entry individually rather than relying on totals.
- Present a short reconciliation statement: opening ledger balance, less duplicate, equals adjusted ledger, agrees to bank; then a separate note listing the 9 held invoices and their status.
This gives the owner a defensible document for the bank and a clear list of what still needs chasing, without inventing figures.