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Balancing entries

For a withdrawal from a bank account number or a cash deposit into a bank account number, you can use a journal entry suspense account (for example Balancing Entries) for journalising. You 'park' amounts in this account that are on the way from cash to bank or vice versa. Once you have added all transfers in Profit, the suspense account must be balanced (balance is zero).

You can expand the suspense account overview by reconciling entries that belong together. Entries that are reconciled disappear from the Financial entries to be reconciled view. The entries that remain are still in progress (or have been recorded incorrectly) and explain the balance in the suspense account.

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Description

For transfers between cash and bank or bank and bank, a suspense account is often used because the transaction can take several days. In this situation, you make two entries in Profit using a suspense account. You can use Balancing Entries as the suspense account, for example.

Cash withdrawal or cash deposit

For a cash withdrawal from a bank account number, you enter the following journal entry in the cash book:

Account

Debit

Credit

Cash

amount withdrawn

 

To balancing entries

 

amount withdrawn

When you receive your bank statement, you post the following journal entry to the bank journal:

Account

Debit

Credit

Balancing entries

amount withdrawn

 

To bank

 

amount withdrawn

For a cash deposit in a bank account number, the journal entries are the opposite of the journal entries above.

It is not possible to make a direct entry on ledger accounts which are linked to a journal. This prevents strange entries such as 'cash to ban' followed by 'bank to cash'. As you can see, the second entry undoes the first entry.

You park the amount that is ‘in progress’ on the suspense account. If this suspense account contains many entries, you can reconcile these to improve your overview. Reconciliation means you balance off debit and credit entries against each other. Amounts that remain are still ‘in progress’. If you are unable to explain specific amounts, you should check if they were entered correctly. For example, the cause could be that an incorrect amount was entered in a journal entry.

Payment from bank to bank

What applies to cash and bank also applies to bank and bank. For a payment from the bank account number to a savings account, you make the following journal entry in the bank journal of the bank account number:

Account

Debit

Credit

Balancing entries

transferred savings

 

To Normal account bank

 

transferred savings

When you receive the bank statement for the savings account, you enter the following journal entry in the bank journal of the savings account:

Account

Debit

Credit

Savings account bank

received savings

 

To Balancing entries

 

received savings

Note: 

Sometimes bank account numbers are not linked to a journal, for example deposit accounts. In such cases you can skip using the Kruisposten ledger account because you can make an entry directly on the Deposito ledger account. If you decide later on to link the Deposito ledger account to a journal, prudence is called for. In order for your administration to work correctly, the balance of the Deposito ledger account needs to be zero at the moment the link is created.

Journalise difference amounts when reconciling balancing entries

Differences can originate with cash deposits, for example, when the quantity of cash is incorrectly counted. You then have two options:

  • You eliminate small differences automatically

    Profit can journalise small differences automatically during the reconciliation if you have specified this in the settings.

  • You do not eliminate small differences

    If you have not specified a limit percentage or amount in the settings, you cannot reconcile balancing entries with different amounts.

Profit will only write off small differences if they are less than the upper limit you have specified in the settings. This upper limit is made up of a percentage and a maximum amount. Profit uses the percentage unless the upper limit is exceeded. If that is the case, the upper limit is used.

Example: 1

The limit is 0.5% with a maximum of €5.00.

You have made a cash deposit of € 600. However, according to the bank statement, only €599.00 was received.

When entering the bank statement, you reconcile the Kruisposten suspense account directly. The maximum difference is 0.5% of €600.00 = €3.00. Since this is less than the absolute limit of €5.00, Profit uses a limit of €3.00.

Thus, Profit automatically writes off the difference of €1.00. All journal entries are given below:

Account

Debit

Credit

Kruisposten

€ 600.00

 

To Kas

 

€ 600.00

Bank

€ 599.00

 

To Kruisposten

 

€ 599.00

Betalingsverschillen

€ 1.00

 

To Kruisposten

 

€ 1.00

 Example: 2

The limit is 0.5% with a maximum of €5.00.

You have made a cash deposit of € 2,000.00. However, according to the bank statement, only €1,994.00 was received.

When entering the bank statement, you reconcile the Kruisposten suspense account directly. The maximum difference is 0.5% (0.5% of €2,000.00 = €10.00). However, this is more than the absolute limit of €5.00.

Thus, Profit will not automatically write off the difference of €6.00.

Reconciliation reference

You can use the Reconciliation reference field as a reference for reconciliation. During the reconciliation process, Profit first checks whether the Reconciliation reference field has been filled in. If it has been filled in, it gets priority in the automatic reconciliation: Profit will match entries faster if they have the same reconciliation reference.

The reconciliation is only done if the balance of the journal entries with the same reconciliation reference is zero or within the set limits for the permitted payment difference in the administration settings.

The Reconciliation reference (Mref) field is also available when importing the financial entries. UpdateConnector FiEntries is also available in this field.

Preparation

Procedure

Process

Entries