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Proving Cash and Making Correcting Entries

Learn how to prove the cash balance and make correcting entries in the general ledger. This lesson covers the process and importance of proving cash, as well as how to correct errors in journal entries using a memorandum.

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Proving Cash and Making Correcting Entries

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  1. LESSON 4-3 Completed General Ledger, Proving Cash, and Making Correcting Entries Original created by M.C. McLaughlin, Thomson/South-Western Modified by Deborah L. Burns, Johnston County Schools, West Johnston High School

  2. (continued on next slide) GENERAL LEDGER WITH POSTING COMPLETED page 102 LESSON 4-3

  3. GENERAL LEDGER WITH POSTING COMPLETED page 103 (continued on next slide) LESSON 4-3

  4. GENERAL LEDGER WITH POSTING COMPLETED page 103 (continued on next slide) LESSON 4-3

  5. GENERAL LEDGER WITH POSTING COMPLETED page 104 (continued on next slide) LESSON 4-3

  6. GENERAL LEDGER WITH POSTING COMPLETED page 104 (continued on next slide) LESSON 4-3

  7. GENERAL LEDGER WITH POSTING COMPLETED page 105 (continued on next slide) LESSON 4-3

  8. GENERAL LEDGER WITH POSTING COMPLETED page 105 (continued from previous slide) LESSON 4-3

  9. PROVING CASH page 106 • Determining that the amount of cash agrees with the balance of the cash account in the accounting records is called proving cash • Businesses always proves cash at the end of a month • If the cash balance as shown in the checkbook equals the cash balance in the cash account, then cash is proved LESSON 4-3

  10. MEMORANDUM FOR A CORRECTING ENTRY page 106 • When an error in a journal entry has already been posted, the incorrect journal entry should be corrected with an additional journal entry • A journal entry made to correct an error in the ledger is called a correcting entry • The source document for a correcting entry is the memorandum LESSON 4-3

  11. 1 Date 2 Debit 3 Credit 4 Source Document JOURNAL ENTRY TO RECORD A CORRECTING ENTRY page 107 November 13. Discovered that a payment of cash for advertising in October was journalized and posted in error as a debit to Miscellaneous Expense instead of Advertising Expense, $140.00. Memorandum No. 15. LESSON 4-3

  12. TERMS REVIEW page 108 • proving cash • correcting entry LESSON 4-3

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