I have a cash-basis calendar-year client who on December 31, 2018, wrote and mailed $5,000 in checks for 2018 expenses. With this activity, his books showed a $9,000 negative cash book balance.
His December 31, 2018, bank statement shows a positive balance of $15,000.
Outstanding checks totaling $24,000 make up the difference.
The client has $50,000 available in a line of credit that he could have borrowed, but did not. His bank account does not have automatic overdraft protection. These are ... Log in to view full article.