This account is handled almost exactly like the Reserve bank - collection account just explained, excepting that it is concerned with items which are sent to other than Federal Reserve banks for collection. The bookkeeping principle is the same. That is, when the checks are dispatched, the general ledger entries are:

Debit: Due from Other Banks - Collection Account (21) Credit: Due to Depositors (37) (that is, the various owners of the items)

Debits are likewise made in the collection ledger against the accounts of the collecting banks. These debits support the general ledger debit to the collection account. On the estimated available dates or on receipt of remittances from the correspondent banks covering the items sent to them, the general ledger entries are:

Debit: Due to Depositors (37) or Debit: Cash (11)

Credit: Due from Other Banks - Collection Account (21)

The character of the foregoing debit would vary depending upon the funds received from the collecting banks.

Auxiliary Records

The auxiliary ledger supporting the other bank collection account is substantially the same as that used for the Federal Reserve bank - collection account. There is an account for each bank to which items are sent, and those accounts are charged when the items are dispatched and as remittances are received, or, as was said, at the estimated available date. Exchange charges complicate somewhat the bookkeeping on these collection ledgers, but their presence simply means more figures. They do not affect the principle of the bookkeeping. For example, if a $2,000 item is sent to a correspondent and charged to it on the collection ledger, and if the correspondent deducts fifty cents for exchange charges, the entries resulting therefrom might be illustrated as follows:

While this would indicate that this bank stands the exchange charge, that may not be the case because at the time of the original deposit, exchange is usually deducted for such out-of-town items as must bear it. The entries showing an exchange deduction from a deposit are as follows:-

This last entry would, of course, in practice, precede the one shown above it, that is, a deposit must be received by the bank before items in it can be sent out for collection.