What explains the cash difference?
You prepare a month-end bank reconciliation for the fictional Alder Supply Co.
The question
The opening ledger and bank statement use the same cutoff. The ledger includes deposit D-600 and payment P-250. The matching sheet shows the full deposit in transit and the payment outstanding. The controller approves entries.
| Amount (USD) | |
|---|---|
| Ledger balance | 12450 |
| Bank statement balance | 12160 |
| Deposit D-600 marked in transit | 600 |
| Payment P-250 marked outstanding | 250 |
The opening matching sheet marks both timing items as absent from the bank statement.
“Explain the difference and what you would send to the controller.”
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A strong answer, step by step
Open each step in turn. This is one strong answer, not the only one.
Step 1: Where is the opening difference?
What would you do here? Open the move you’d make.
Record a $60 ledger increase
Tempting, but it misses something. The difference gives no evidence of a specific transaction.
Adjust the bank side and trace the $60 gap
The strong move. This applies the opening timing items to the side where they are missing.
Adjust the ledger side for both timing items
Tempting, but it misses something. That would count the deposit and payment a second time in the ledger.
See how a strong candidate says it
“The adjusted bank balance is $12,510 after adding the $600 deposit and subtracting the $250 payment. That is $60 above the ledger. I would check the underlying records for the difference.”
Why it works: Both timing items are already in the ledger. They belong on the bank side of the opening workpaper.
Step 2: Which entries could explain the gap?
The bank statement shows a $40 service fee and $100 interest credit I-100. An AI report calls both missing from the ledger.
What would you do here? Open the move you’d make.
Propose both entries because the balances now tie
Tempting, but it misses something. A tie can hide a duplicate entry and an unrelated timing error.
Add both amounts to the bank balance
Tempting, but it misses something. The statement balance already includes the fee and interest.
Check both lines against the ledger before proposing an entry
The strong move. The two suggested adjustments are provisional until you check what posted.
See how a strong candidate says it
“If both lines are absent from the ledger, subtracting the $40 fee and adding $100 interest gives $12,510. I would verify each line against the ledger before proposing either entry.”
Why it works: An arithmetic tie is a useful check. The source lines establish whether an entry is needed.
Step 3: What changes in the ledger export?
The refreshed ledger shows the $100 interest credit already posted under a different reference. The $40 service fee is absent.
What would you do here? Open the move you’d make.
Drop the interest suggestion and keep the $100 gap open
The strong move. The fee still needs a proposed entry. The revised calculation exposes another difference.
Keep both proposals so the workpaper ties
Tempting, but it misses something. This would record the same interest twice.
Drop the fee along with the interest suggestion
Tempting, but it misses something. The refreshed ledger confirms the fee is absent.
See how a strong candidate says it
“I would drop the $100 interest suggestion and retain the $40 fee proposal. The adjusted ledger is $12,410. It is still $100 below the adjusted bank balance, so I would leave the difference open.”
Why it works: The refreshed export shows the interest under a different reference. Recording it again would duplicate the credit.
Step 4: What do you send for approval?
Statement detail shows that $100 of deposit D-600 had already been credited at cutoff and is included in $12,160. This credit is separate from interest I-100.
What would you do here? Open the move you’d make.
Keep $600 in transit and add a $100 ledger entry
Tempting, but it misses something. The bank has credited $100 of the deposit, and the source check already ruled out extra interest.
Correct the timing item and submit the fee proposal
The strong move. The workpaper ties after the supported changes. The controller owns approval.
Remove the whole deposit from the timing items
Tempting, but it misses something. The bank credited only part of D-600. $500 remains in transit.
See how a strong candidate says it
“Only $500 of D-600 remains in transit. Subtracting the $250 outstanding payment gives an adjusted bank balance of $12,410. It ties to the ledger after the $40 fee. I would send the support and fee proposal to the controller.”
Why it works: The statement balance already includes part of the deposit. The fee is the only supported ledger correction.
The answer, in short
- Decision
- Submit the $12,410 tie-out and the supported $40 fee proposal to the controller.
- Because
- The refreshed ledger rules out a duplicate credit. The statement detail confirms how much of the deposit remains in transit.
- What would change it
- A later source correction to the fee, deposit or payment would require a revised tie-out.
Common traps
- Keep bank timing items separate from ledger entries.
- Check the source IDs before proposing a correction.
Check your answer
- I adjusted the opening bank side and found the $60 difference.
- I treated the AI suggestions as provisional.
- I removed the duplicate interest proposal.
- I reconciled both sides and gave the controller the support.
Last reviewed Nov 11, 2026