Bank processing error

aterral

My client paid a vendor by check and when the vendor took it to his bank, that bank processed it for $2000 more than what the check was written for. I have excluded the transaction from the bank feed. Neither bank caught the error. This happened in October and now it's November. My client has contacted their bank and they are going to eventually create an adjustment for the error. How do I reconcile October to account for the extra $2000 that it was processed for and how do I reconcile the adjustment when reconciling November?

Robin_K

I’ve had something similar happen once, and the timing always makes it a bit awkward for the reconciliations. The cleanest way I handled it was to treat the October over-withdrawal as a temporary clearing entry, just so the bank statement and the register line up for that month.

What I did was record a one-off expense for the extra $2000 and park it in a bank error or clearing account. Nothing fancy, just enough so the October reconciliation checks off. Then, when the bank finally pushed the correction through in November, I reversed it back out of that same account so the whole thing zeroes itself out across the two periods. It keeps the audit trail tidy and avoids rewriting October after the fact.

Robin Kon

Bank processing error

Banking