Double Entry Book Keeping

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davidk65 | 10:09 Mon 12th May 2014 | Personal Finance
3 Answers
I am struggling with a very basic system of Double Entry Book Keeping.
I wonder if anyone can help my understanding. It is on the payment out and the balancing that I can't follow the logic. For example:
From the bank statement I can see: Closing Balance. Total withdrawals. Total Paid In.
The cash book lists total payments, Cheques and DD's.
a) If the Cash Book Total = Statement Withdrawn Total: Does this mean all cheques /DD's have been cashed?

b) However, what does it mean if the bank statement "withdrawn amount" is greater than the total payments shown in the Cash book? Is this the amount of previous cheques that have now been cashed from a previous month? How do you deal with this in the cash book?

c) On the other hand; if the banks "withdrawn" total is less than that shown in by the cash book total, is the difference between the two totals the amount of cheques/DD's that have not yet been cashed?

d) Looking at previous entries made by others, as part of balancing the books, they identify an amount as "cheques presented out of time". This amount has been deducted from closing bank statement amount, then then added to the total shown in the cash book as total payments. This balances back to and agrees with the cash side. Try as I might, using their figures I can't find out were the figure they show as "cheques presented out of time" was arrived at.

Help Please


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Confusing. Ours represents what goes in and out of the bank- so it makes no difference if cheques are paid late. Are you assuming a cheque will go in on a certain date and then finding it's out, because it's late. I suppose it's the difference between expected credit and actual credit- but seems a complicated way to do it.
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Hi "cruciverbals" and "pixie373". I note your comments and thank you.
The system starts with the closing balance from the previous month which becomes the opening balance for the current month added to this is any income received in the month.
On the other side there is listed and totaled all cash and cheques paid out in that month.
At the month end, from the bank statement, the ins' and outs'are reconciled to the book. The bank statement also gives total withdrawals. If this figure is deducted from the total amount paid out I assume what remains is the value of cheques not yet cashed? The question what to you do with the value of the un-cashed cheques. should one then deduct this from the credit balance and use this as the opening balance for the next period?

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