Debtors Out of Balance and customer deposits

This problem is a common one and compounded by the fact that recorded entries can’t be fixed. All we can do is get it right for future entries. The error is compounded further if a journal entry is posted by your accountant to align the debtors list with the debtors control account at year end as the debtors Out of balance (OOB) should fix itself as described below.

Example:
Assume on 30/6/12 the Debtors ledger balances to Debtors control account (OOB = $0)

The file will be out of balance by $450 due to the credit to debtors control on the 9^th. Once these entries take place they can’t be deleted, reversed or re-dated. The OOB will eventually come right by itself. If it doesn’t, another problem exists which will cause an OOB. Based on these events an Out of Balance will exist from 9/7/12 to 15/7/12. On the 15/7 the OOB come back to $0 as no prepayment exists.

See the effects of the entries on the following reconciliation reports:

However, if the order turned into an invoice after the payment date which is logical then no Out of Balance will exist. After all, surely the invoice date would always be a future date?

Lynley Averis

Lynley is an MYOB Certified Consultant & has been involved in training in New Zealand since 1985. She's written various accounting & MYOB workbooks including co-authoring “Bookkeeping for Dummies”. She has consulted on all versions of MYOB Accounting, Retail and Payroll over the past 18 years and has previously worked for MYOB. She currently consults to NZ businesses on all aspects of business systems - her mission for clients is for them to spend as little time as possible doing accounting!