How to account for bank error?

**facboy** · 20 July 2007, 09:27

i can advise you on what to do with it. my fee will be £2000. send me a pm

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**dang65** · 20 July 2007, 10:00

What did the bank say when you informed them 6 months ago that they had mistakenly deposited 2000 pounds into your company account?

**Darren@UptonAccountants** · 20 July 2007, 10:26

Bank Accounts

Should sit on the balance sheet as a debtor as it is likely to taken back at some point! This is if you are doing the year end accounts....if left in the bank account rec, the cash position will be incorrect.

Even if left as unallocated cash, it still means that is it sat on the balance sheet, it's just where it is categorised.

If it relates to one of your customers then should be allocated as such.

Which book keeping system do you use.

**oxtailsoup** · 20 July 2007, 10:31

They said it was not their mistake and suggested we look through our clients to see who owed us that money. Obviously being a contractor I only have a few clients and a handful of sales invoices. All of which are for monthly services (i.e. £10k plus) and have VAT added. This was just a flat payment of £2000 into our account.

**JKnz** · 20 July 2007, 10:53

Originally posted by Darren@1stAccountancyServ

Should sit on the balance sheet as a debtor as it is likely to taken back at some point!

Actually no.....

(btw based on that advice I hope you are not actually an accountant??)

If it was a bank error it should be a reconciling item on your bank reconciliation and shouldn't even be included in your balance sheet. Your balance sheet should represent what's in your trial balance/cashbook not whats on your bank statement.

If you think it does relate to one of your clients and did want to include it as part of your bank balance then you would either need to put a credit for 'unallocated cash' against any debtors balance you currently have or if you have no debtors at year end then set up a corresponding creditor balance (not a debtor!!!) on your balance sheet and label it as 'Accrued revenue' or 'Income received in advance'.

Hope that helps

**Rocket** · 20 July 2007, 10:56

Originally posted by oxtailsoup

They said it was not their mistake and suggested we look through our clients to see who owed us that money. Obviously being a contractor I only have a few clients and a handful of sales invoices. All of which are for monthly services (i.e. £10k plus) and have VAT added. This was just a flat payment of £2000 into our account.

Not their mistake? What a change from the usual bank nonsense...Get it in writing...that way when they come back to you in 8-9 months you can say it's not their mistake and have the paperwork to prove it!

Something tells me that you'll have to pay it back at some point though...

As to how it should show up in the company account...what does your accountant say?

**dang65** · 20 July 2007, 11:24

Originally posted by oxtailsoup

They said it was not their mistake and suggested we look through our clients to see who owed us that money.

I was really wondering if the bank could tell you where it came from. Don't think that's a secret usually?

**BrilloPad** · 20 July 2007, 11:25

bet its money laundering money. watch out for mr big.

**JKnz** · 20 July 2007, 16:52

Originally posted by Darren@1stAccountancyServ

Should sit on the balance sheet as a debtor as it is likely to taken back at some point! This is if you are doing the year end accounts....if left in the bank account rec, the cash position will be incorrect.

Even if left as unallocated cash, it still means that is it sat on the balance sheet, it's just where it is categorised.

If it relates to one of your customers then should be allocated as such.

Which book keeping system do you use.

If it is to be taken back at some point then shouldn't it be in your balance sheet as a creditor and not a debtor?????

And if you are including it in your cash balance (which you appear to have every right to) you are going to need to make a credit entry to somewhere, either 1) revenue if you are sure its revenue you have not billed, 2) unallocated cash if you are not yet sure to which debtor it relates or 3) a creditor to reflect that it isnt your companys money and is to be paid out in the near future.

However if you are 100% sure it's not yours and it is a bank error I would not account for it as part of your bank balance and leave it as a reconciling item. Despite the quoted comment above and the fact these unknown funds are in your bank account, this will be the true cash position of your company as the funds are not yours.

All comes down to whether you are comfortable that the funds are your companys or not......the bank says its not a mistake so hey they may well be.

How to account for bank error?