Accounting Exercise 17: Reconciling Accounts Receivable

Exercise Overview

In this exercise on accounts receivable, your task is to reconcile amounts of money received from the customerand work out which invoices are still unpaid.

Exercise Instructions

This task involves some detective work but it is the kind of detective work that goes on in accounts offices all the time.

Dowload and take a look at your customer's account statement by clicking on the illustration on the right or click here.

Over the last four months, you have received payments from the customer every month. However, there is an outstanding balance of $389.00.

Now you have received a cheque of $291.00 and this does not match up. So, you need to find out which invoices have been paid and which have not. Once you have identified the invoices unpaid, you should be able to work out what the $291 is for.

Along the bottom of the statement you will see a row filled in yellow marked 120 Days, 90 days, 60 days, 30 days and current. This is called Aged Debtor analysis. The purpose is to provide information on how old debts are. If April invoices are "Current" and March invoices are "30 Days", then put respective values in each of the cells in the yellow row. The total debt according to the statement is $389.00, and therefore you should ensure that the sum of boxes in yellow equals $389.00

Suggested Method

In the credit column of the customer's statement that you downloaded, you will see 5 payments have been made. Try to work out what each of these payments is for. The first payment is $160 and you should notice that the Balance b/fwd (brought forward) on 1 January is also $160.00, and this should help you!

The next payment is $242. Which invoices does this payment cover?

Every time you identify which invoices are covered by a particular payment, cross off the invoice and cross off the payment.

Then work out the next three payments and work out which invoices are paid.

When you have finished, you will have a number of invoices not crossed off, and these are the unpaid invoices.

Lastly, you should now be able to work out what the $291 is for.

Exercise Resources

Download the Customer's Statement.

Answer to this Exercise

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