The day's cash takings were handed to the collector and reached the bank the next day: where does this money sit on the reporting date and which accounts does it pass through?

«Shirinbuloq Konditer» LLC sells cakes and sweets in three shops. Every evening the cashier Lobar packs the day's cash takings and hands them to the cash collector. The money reaches the settlement account at the bank on the next working day (this is an assumption made by the author and holds throughout the article). On Thursday evening the chief accountant Hamida wants to prepare a report, and a question arises: where is the 14 600 000 soum handed over that day right now? It is not in the cash desk, it is not yet visible on the bank statement, but it has not vanished either.

This article shows how to reflect that gap in the books: which account is used, which journal entries are made, which balance sheet line the money falls on, and why booking the money as "received by the bank" in advance is a mistake.

The money left the cash desk but has not reached the bank: where does it sit?

Cash collection means a service that delivers cash to the bank through collectors. The money leaves the organisation's cash desk but does not yet arrive in the bank account: for several hours or days it is on the way. For such money NAS No. 21 provides a separate account: 5710 "Cash (transfers) in transit".

Under paragraph 238 of the standard, this account records "cash that has left its place of storage but has not reached its destination", including takings handed to a cash collector. The account is a transit account and serves as a link for continuous control over the movement of money. In plain words: 5710 is a "record of money on the road". When the money leaves the cash desk it is entered here, and when it reaches the bank it is taken off here. That way every soum is visible at every moment: you can see where it is.

One week as an example: how much money is where each day?

Takings of «Shirinbuloq Konditer» (prepared by the author, in soum). Every evening all the takings are handed to the collector, and no balance is left in the cash desk. The opening bank statement balance is taken as zero:

Calculation: five days of takings are 12 400 000 + 15 800 000 + 11 200 000 + 14 600 000 + 18 000 000 = 72 000 000 soum. Of this, 54 000 000 soum reached the bank (the money handed over on Monday, Tuesday, Wednesday and Thursday). The 18 000 000 soum handed over on Friday is in transit. Check: 54 000 000 + 18 000 000 = 72 000 000. Each evening the balance of 5710 equals exactly the amount handed over that day, because the previous day's money has already reached the bank on the next working day.

Which journal entries are made?

Three stages, all taken from the standard rows of NAS No. 21. Take Thursday as an example (14 600 000 soum):

In the example the takings are assumed to be exclusive of VAT, so there is no separate VAT entry. Because the company sold finished products (a cake), 9010 was chosen; row 2 of paragraph 223 gives the range 9010–9030, and when selling goods or services you pick the appropriate account.

The standard has two other routes as well: - If the cashier takes the money to the bank personally, without a collector, 5710 is not involved: Dt 5110 – Ct 5010 (paragraph 226, row 4). - If the collector returns the money to the cash desk without taking it to the bank: Dt 5010 – Ct 5710 (paragraph 239, row 6).

For payments for bank and audit services the standard gives the row Dt 9430 – Ct 6990 (paragraph 412, row 12). Whether to put the collection service fee into this row is decided by the company's accounting policy: this row of the standard does not name cash collection separately.

What shows on the balance sheet and the statement at the reporting date?

If Hamida prepares the report on Thursday evening, the state of the accounts is as follows (prepared by the author, in soum):

There is no foreign currency account (line 350) in this example. Total: 0 + 39 400 000 + 0 + 14 600 000 = 54 000 000 soum. The key point: money in transit does not drop out of the balance sheet; it has its own place in line 360 of cash, and it is included in the total of line 320. The bank statement shows the balance of 5100 that day, that is 39 400 000 soum, and it fully matches the balance of line 340 in the books.

What if the accountant books the money to the bank straight away?

Sometimes it is recorded as "we gave it to the collector, so it is in the bank": Dt 5110 – Ct 5010, even though the money has not yet arrived. Compare the result (Thursday evening, in soum):

In the second column the settlement account balance comes to 12 400 000 + 15 800 000 + 11 200 000 + 14 600 000 = 54 000 000 soum, while the statement shows 39 400 000. The difference is 54 000 000 − 39 400 000 = 14 600 000 soum, exactly the last collection amount. Under paragraph 225, the debit of 5110 records "receipts of cash in the settlement account", and amounts wrongly posted when checking the bank statement are linked to accounts 4860 or 6960. Showing money that has not reached the bank in 5110 does not fit this definition and creates a "phantom" difference in the daily comparison with the statement. Account 5710 explains exactly this difference in advance.

Practical tips

• Check the balance of 5710 every evening. As in the example, at the end of the day the balance should equal the amount handed over today. If it is larger, money from earlier days has not yet reached the bank; find the cause using the statement and the collector's document (practical tip).
• Separate the analytical accounting. The standard requires analytical accounting for 5700 by types of money transfers (paragraph 238). If you also split it by handover day and by collector, you immediately see which amount has not yet arrived (practical tip).
• Keep the document confirming the amount handed to the collector. The entry in 5710 relies on this document; when reconciling with the statement it is the main evidence (practical tip).
• Pay special attention at year end. Money in transit at the reporting date goes into line 360; do not add it to the cash desk or bank balance (Regulation No. 181, Appendix 1).
• If money stays in 5710 for several days, treat it as a signal. Draw up a reconciliation report with the bank and the collector; if the money comes back, make the entry Dt 5010 – Ct 5710 (paragraph 239, row 6).