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Bank available balance

I have a deposit made at the bank on the last day of the month and the corresponding accounting entries are made on our books (Dr Bank Cr AR). However the bank has not made the funds available and therefore my available balance is less than the bank balance which includes the deposit credited already to my account. Because there is a chance that this check may bounce, can I make another set of entries to reverse the bank entries that I already made and present this on the bank reconciliation as a reconciling item for the bank balance? Is this in compliance with GAAP? Any accounting literature I could refer to? Thanks in advance.

Answers

Anonymous
(Controller) |

I wouldn't bother making any adjustment until you know that the check will bounce. The funds are technically in your account, although you don't have use of them yet. In any case, worst case scenario, it's a small reclass between Cash & AR and auditors wouldn't be too fussed by this.

Topic Expert
Patrick Dunne
Title: Chief Financial Officer
Company: Milk Source
(Chief Financial Officer, Milk Source) |

No accounting entries are needed besides your original entry. Whether the cash is available is irrelevant. When you are notified that you have an NSF check, that is when you would worry about additional book entries.

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