Summary
Highlights
The video begins by explaining the concept of a creditors record from the perspective of a business buying goods from a supplier. The business, 'Village More Retailers', is the debtor to the supplier, 'Gainey Shoes'. The records are kept in a ledger, and the business receives a monthly statement from the supplier. It's crucial to identify who "you" are, which is the business performing the reconciliation.
The initial balances in the ledger and the statement differ. The statement starts at 17,400, ending at 20,540, while the ledger starts at 7,400, ending at 26,030. The first discrepancy is a 10,000 difference from a check sent in July but only received and banked by Gainey Shoes in August. Since the business already recorded this in July, no new entry is needed in the current period.
The business was unaware of a 500 discount granted by Gainey Shoes in July. Since discounts reduce the amount owed, 500 needs to be debited (subtracted) from the ledger. An error in returned goods is also identified: Gainey Shoes incorrectly debited 730 instead of 370 for returned goods. The difference of 360 needs to be added back to the reconciliation statement.
The business made an error in recording a discount on the 12th. They debited 2,200 when the actual discount was 1,100. Therefore, 1,100 needs to be credited (added) back to the account. For invoice 458, the business recorded 13,100, but the correct amount on the statement is 11,300. The difference of 1,800 needs to be debited (subtracted) from the ledger.
Invoice 477 for 2,560 appears on the statement but was not ordered by Village More Retailers, so they will not pay for it. Additionally, invoice 9,800 was incorrectly attributed to Gainey Shoes in the business's ledger, but it belongs to another supplier. This amount needs to be debited (subtracted) from the Gainey Shoes account in the ledger.
The statement shows delivery charges of 410 that were not recorded in the business's ledger, so this amount needs to be added. Finally, entries made in the business's ledger after the statement date (invoice, check, and discount) for 26, 2,200, and 1,100 respectively, are outstanding items that need to be accounted for in the reconciliation statement as they have not yet been processed by the supplier. The outstanding invoice is added, while the outstanding check and discount are subtracted.