How do I handle bank errors in a reconciliation?
Bank errors adjust the bank side because the bank statement is wrong, not the company's books.
If the bank incorrectly charged the company's account, add the amount back to the bank statement balance. If the bank incorrectly credited the company's account, subtract the amount from the bank statement balance. The goal is to correct the bank statement to what it should have shown.
Do not record a journal entry for a pure bank error unless the company's books also contain an error.
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