Supplier Reconciliation - HELP

Hello all. Please can someone help me with understanding supplier reconciliation. The issue I am really stuck on is when to add or when to deduct an amount and I just cannot get my head around it.
Any help you can offer would be greatly appreciated.
Thanks, Stacey.

Comments

  • Pian32
    Pian32 MAAT Posts: 472
    When doing any reconciliation you want the current figure. This means you want to take account of any transactions that you know of that have happened but might not be through the bank/system yet.

    Any pending payments would want to be deducted from the amount owed,
    Any recent invoices (that haven't been recorded) would need to be added to the amount owed.
    AAT Level 4, MAAT
    ACCA in progress
    F4- Passed Aug 2020
    F5- Passed Dec 2020
    F6- Passed Sep 2020
    F7- Passed June 2021
    F8 - Passed Sep 2021
    F9 - Passed June 2021

    SBL
    SBR - Passed Mar 22
    ATX - Passed Dec 21
    APM -
    StaceyRoe
  • StaceyRoe
    StaceyRoe Registered Posts: 3
    Thanks for your response. I will keep this is mind and try another practice question.
  • Pian32
    Pian32 MAAT Posts: 472
    If you still find it confusing post the question here and I can walk you through it
    AAT Level 4, MAAT
    ACCA in progress
    F4- Passed Aug 2020
    F5- Passed Dec 2020
    F6- Passed Sep 2020
    F7- Passed June 2021
    F8 - Passed Sep 2021
    F9 - Passed June 2021

    SBL
    SBR - Passed Mar 22
    ATX - Passed Dec 21
    APM -
    StaceyRoeannefoth
  • StaceyRoe
    StaceyRoe Registered Posts: 3
    @Pian32 If you have some time, please can you explain the reasoning behind when something requires adding or deducting because this is the issue I'm having understanding. This is one of the questions from the activity book and although I have seen the answers, I still cannot make sense of why each one was added or deducted. Any help you can provide would be great - thank you.
  • annefoth
    annefoth Registered Posts: 39
    is this level 2 bookkeeping controls
    i can see the discrepancy but just reading up about reconciling control accounts
    i am doing level 2 but due to sit my last exam this friday
  • annefoth
    annefoth Registered Posts: 39
    StaceyRoe said:

    @Pian32 If you have some time, please can you explain the reasoning behind when something requires adding or deducting because this is the issue I'm having understanding. This is one of the questions from the activity book and although I have seen the answers, I still cannot make sense of why each one was added or deducted. Any help you can provide would be great - thank you.

    i am now thinking back to what we actually did with reconciling control accounts after we found the difference between the ledger control account and the ledger account
  • Pian32
    Pian32 MAAT Posts: 472
    edited March 2021
    Okay so first step is to identify what is included in both records. I like to go through the receipts and payments then the opening balance (based on the supplier statement).

    Receipts
    £610 is included in both 3/5
    £ 20 is included in both 7/7
    £458 is only in the Ledger and was made in the 29th so likely hasn't been processed by the supplier (1)

    Payments
    Inv114 Is in both
    Inv 115 is in both
    Inv 120 is in both
    Inv 137 includes a trasposition error 74 / 47 (2)
    Inv 141 is in both

    Opening Balance
    The opening balance matches

    Treatment depends on where you start from.
    (1) £458 has not been included in the supplier statement this would be deducted from the supplier statement in order to reconcile the transaction

    (2) The error is £27 difference for Inv 137. This can be checked against the original invoice to discover who made the error (There might be other information in the question that confirms this if this needs changing.) The 27 will need to be added to the supplier statement. The below shows a reconcilliation starting from the supplier statement

    Supplier Statement 657

    Unprocessed payment (458)
    Error in Inv 137 27

    Purchase Ledger 226


    The treatment is reversed if you start from the purchase ledger and the question should indicate which one it wants you to start from. From this information alone you won't necessarily have a 'correct' figure for the account as you don't know who made the error but the purpose of the question is to make sure the two documents do agree once all errors and delayed transactions are accounted for as well as being a good way to find errors.

    Process works well as follows:
    1) Identify the different transactions
    2) Identify the starting document (Statement or ledger)
    3) Consider how the missing figure effects the document you started from.
    4) Apply the addition/subtraction as appropriate

    Remember the goal is to reconcile the accounts which essential means show that they agree you do this by starting from the end figure in one and finishing at the end figure in the other.

    I hope this helps for the question stated.

    Note: I do the opening balance last because if they don't match it can be easier to rule out other transactions first and then it should be obvious which ones need to be applied to the opening balance.
    AAT Level 4, MAAT
    ACCA in progress
    F4- Passed Aug 2020
    F5- Passed Dec 2020
    F6- Passed Sep 2020
    F7- Passed June 2021
    F8 - Passed Sep 2021
    F9 - Passed June 2021

    SBL
    SBR - Passed Mar 22
    ATX - Passed Dec 21
    APM -
    StaceyRoe
  • annefoth
    annefoth Registered Posts: 39
    annefoth said:

    StaceyRoe said:

    @Pian32 If you have some time, please can you explain the reasoning behind when something requires adding or deducting because this is the issue I'm having understanding. This is one of the questions from the activity book and although I have seen the answers, I still cannot make sense of why each one was added or deducted. Any help you can provide would be great - thank you.

    i am now thinking back to what we actually did with reconciling control accounts after we found the difference between the ledger control account and the ledger account
    sorry i have got mixed up and i am thinking about reconciling the ledger control accounts with the ledger accounts
    StaceyRoe
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