Fundamentals of SENIOR

Accountancy, Business, and HIGH

Management 2 (FABM2) SCHOOL

Self-
Bank Reconciliation Statement Learning
Module
Part I 9

Quarter 2
Fundamentals of Accountancy, Business, and Management 2
Quarter 2 – Self-Learning Module 9: Bank Reconciliation Statement Part I
First Edition, 2020

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FABM2
SENIOR
HIGH
SCHOOL

Self-
Learning
Module
9

Quarter 2

Bank Reconciliation
Statement Part I
Introductory Message

For the Facilitator:

Welcome to the Fundamentals of Accountancy, Business, and Management 2

for Grade 12 Self-Learning Module on Bank Reconciliation Statement Part I.

This Self-Learning Module was collaboratively designed, developed and

reviewed by educators from the Schools Division Office of Pasig City headed by its
Officer-in-Charge Schools Division Superintendent, Ma. Evalou Concepcion A.
Agustin, in partnership with the City Government of Pasig through its mayor,
Honorable Victor Ma. Regis N. Sotto. The writers utilized the standards set by the K
to 12 Curriculum using the Most Essential Learning Competencies (MELC) in
developing this instructional resource.

This learning material hopes to engage the learners in guided and independent
learning activities at their own pace and time. Further, this also aims to help learners
acquire the needed 21st-century skills especially the 5 Cs, namely: Communication,
Collaboration, Creativity, Critical Thinking, and Character while taking into
consideration their needs and circumstances.

In addition to the material in the main text, you will also see this box in the
body of the module:

Notes to the Teacher

This contains helpful tips or strategies that
will help you in guiding the learners.

As a facilitator, you are expected to orient the learners on how to use this
module. You also need to keep track of the learners' progress while allowing them to
manage their learning. Moreover, you are expected to encourage and assist the
learners as they do the tasks included in the module.
For the Learner:

Welcome to the Fundamentals of Accountancy, Business, and Management 2

Self-Learning Module on Bank Reconciliation Statement Part I.

This module was designed to provide you with fun and meaningful
opportunities for guided and independent learning at your own pace and time. You
will be enabled to process the contents of the learning material while being an active
learner.

This module has the following parts and corresponding icons:

Expectations - These point to the set of knowledge and skills

that you will learn after completing the module.

Pretest - This measures your prior knowledge about the lesson

at hand.

Recap - This part of the module provides a review of concepts

and skills that you already know about a previous lesson.

Lesson - This section discusses the topic in the module.

Activities - This is a set of activities that you need to perform.

Wrap-Up - This section summarizes the concepts and

application of the lesson.

Valuing - This part integrates a desirable moral value in the

lesson.

Posttest - This measures how much you have learned from the
entire module.
 EXPECTATIONS

After going through this self-learning module, you are expected to:
1. give the steps in reconciling process;
2. understand the reconciling process;
3. compute for bank and company reconciliation statements; and
4. prepare a bank reconciliation statement.

PRETEST

Multiple Choice. Directions: Read and analyze the statements. Write the letter
of your answers before the number.

1. Which action should be taken when a fee was charged by the bank for a
returned check?
A. Add to Book Balance C. Deduct from Book Balance
B. Add to Bank Balance D. Deduct from Bank Balance

2. Which action should be taken when there is a Deposit in Transit?

A. Add to Book Balance C. Deduct from Book Balance
B. Add to Bank Balance D. Deduct from Bank Balance

3. Which action should be taken if the bank collects a service charge from the
company?
A. Add to Book Balance C. Deduct from Book Balance
B. Add to Bank Balance D. Deduct from Bank Balance

4. Which action should be taken when the company has outstanding checks?
A. Add to Book Balance C. Deduct from Book Balance
B. Add to Bank Balance D. Deduct from Bank Balance

5. The Bank Reconciliation Statement shows a balance of P6,000.00 as per cash

book, deposits are not yet credited amounting to P3,400.00, and as per Bank
Statement, it is credited as P4,000.00. How much is the unpresented check?
A. P1,400.00 C. P6,000.00
B. P7,400.00 D. P1,200.00
 RECAP

Directions: Classify the given reconciliation item either Reconciliation in Bank or

Book. Put a / (check) under each reconciliation.

Reconciliation Item Reconciliation per Bank Reconciliation per Book

NSF
Bank Service Charge
Credit Memo
DIT
Outstanding Checks
Debit Memo

LESSON

Let us recall the definition of Reconciliation. It is a process that compares and

checks the two sets of records namely the company’s record and the bank’s record
if both balances are equal. In this module, you will learn how reconciliation
statements are being handled and it is simply shown in Illustration No. 1

BANK RECONCILIATION STATEMENT

COMPANY BANK

COMPANY’S CASH BOOK BANK STATEMENT

(General Journal & Ledger)

RECONCILE

Illustration 1
How is reconciliation being done?

Step 1. Adjusting the balance per bank

The first step is on the part of the bank. It should adjust the balance on the
bank statement. The company’s bank statement must reflect the accurate
recording of the company’s bank transactions. Illustration No. 2 shows how to
adjust the balance per bank for every end of the month.

Unadjusted Balance per Bank Statement (end of the month)

Adjustments:
Add: Deposits in Transit
Deduct: Outstanding Checks
Adjusted/Corrected Balance per Bank

Illustration No. 2

Step 2. Adjusting the Balance per Book (Company’s Book)

The second step of reconciliation is on the part of the company. It should be equal
to the balance per bank. Illustration no. 3 shows how the company makes
adjustments on its cash account. The adjusted balance per book must be true
and corrected.

Unadjusted Balance per Book (end of the month)

Adjustments:
Deduct: Bank Service Charges
Deduct: NSF Checks and Fees
Deduct: Check Printing Charges
Add: Interest Earned
Add: Notes Receivable collected by bank
Add or Deduct Errors in Company’s Cash Account
Adjusted/Corrected Balance per Books

Illustration No. 3

Step No. 3 Comparing the Adjusted Balances (Bank Statement vs. Company’s
Books)

The third step is to compare the adjusted balance per bank (Step 1) and the
adjusted balance of the company’s books (Step 2). The two balances must be
equal. In case the said balances are not the same, the process is done repeatedly
until both balances are equal. The balances must state the true and correct figure
of cash as per the date stated on the bank reconciliation statement.
 Step 4. Preparing Journal Entries

The last step to be done is on the part of the company where adjustments in the
Journal entries must be prepared. This is part of the balance per book (Step
2).

Illustrated Problem:

Read and analyze the bank transactions for January 31, 2020.

Where should each transaction be recorded to be able to prepare bank reconciliation?

Item #1 The bank statement for January 2020 shows an ending balance of P34,097.00

The bank statement under January indicates the P1,500.00 service charge for
Item #2
maintaining the company’s checking account.
On the bank statement under January 28 shows a return check of P150.00 plus
Item #3 a related bank fee of P150.00. The returned item is the customer check. It was
returned because of NSF and was marked “do not deposit.”
The bank statement under January 20 shows a charge of P800.00 for the
Item #4
printing of the check.
On the bank statement under January 31 shows an interest of P800.00 added
Item #5
to the company’s checking account.
The bank statement shows the bank collected a note receivable of P21,000.00
on January 29 and was deposited into the company's account. On the same day,
Item #6
the bank charge P1,000.00 as a fee for collecting the note receivable and
withdrew the P1,000.00 from the company's account.
On the company's Cash account at the end of January shows a balance of
Item #7
P10,097.00.
During January, the company wrote checks with a total of more than
P60,000.00. As of January 31, P5,210.00 of the checks written in January had
Item #8
not yet cleared the bank and P5,000.00 of checks written in January had not yet
cleared the bank.
The company received cash on January 31 and was recorded on the company's
Item #9 books as of January 31. However, the P4,500.00 of cash receipts was deposited
at the bank on the morning of February 3.
On January 29, the company's Cash account shows cash sales of P540.00, but
Item the bank statement shows the amount deposited was P450.00. Upon review, the
#10
company found out that P450.00 was the correct amount.

Table 1
Solutions:

Following Step No. 1 – Adjusted Balance per Bank

Observed that the amount indicated in table no. 3 were from the given
transactions in Table No. 4.

Unadjusted Balance per Bank Statement (end of the

month)
Item No. 1 P34,097.00
Adjustments:
Add: Deposits in Transit Item No. 9 4,500.00
Deduct: Outstanding Checks Item No. 8 10,210.00
Adjusted/Corrected Balance per Bank P28,387.00

Table 3

Following Step No. 2 – Adjusted Balance per Books

The source of the figures shown in table no. 4 were from the items given in Table
No. 4.

Unadjusted Balance per Book (end of the month) Item No. 7 P10,097.00
Adjustments:
Deduct: Bank Service Charges Item No. 2 1,500.00
Deduct: NSF Checks and Fees Item No. 3 300.00
Deduct: Check Printing Charges Item No. 4 800.00
Add: Interest Earned Item No. 5 800.00
Add: Notes Receivable collected by bank Item No. 6 20,000.00
Add or Deduct Errors in Company’s Cash Account Item No. 10 90.00
Adjusted/Corrected Balance per Books P28,387.00

Table 4

Following Step No. 3 – Compare Adjusted Balance per and Adjusted Balance per
Book of Company. Observed the balances in Table 3 and Table 4 are equal.

Following Step No. 4 – Preparing Journal Entries is in the part of the company.

Step No. 2 are balanced from the company’s cash account found in the general
ledger. Remember that any adjustment needed by the company on its cash account
must be recorded in the general journal. The adjustments to the books are the
results of the amount found on the bank statement but not yet recorded in the
company’s cash account.

Item No. 2, Bank Service Charges

Date Account Title Debit Credit

January 31 Bank Service Charge Expense P1,500.00
Cash P1,500.00
Item No. 3, NSF and other fees

Date Account Title/Name Debit Credit

January 28 Accounts Receivable P300.00
Cash P300.00
Item No. 4, Check Printing Charges

Date Account Title/Name Debit Credit

January 20 Supplies P800.00
Cash P800.00
Item No. 5, Interest Earned

Date Account Title/Name Debit Credit

January 31 Cash P800.00
Interest Income P800.00
Item No. 6, Notes Receivable

Date Account Title/Name Debit Credit

January 29 Cash P21,000.00
Bank Service Charge Expense 1,000.00
Notes Receivable P20,000.00
Item No. 10, Company Error

Date Account Title/Name Debit Credit

January 29 Cash P450.00
Revenue P450.00

ACTIVITIES

How far have you learned?

The accounting records of BEE Company show the summary data of its cash
receipts and payments for November 2019. Its November Cash Balance has
P42,130.00; its Total Cash Receipts is P40,000.00, Total Checks issued is
P25,000.00. The company received its Bank Statement indicating a balance of
P82,000.00. The following reconciling items were discovered.

Item No. 1 – A deposit of cash receipts P3,000.00 of November 30 is too late to

include in the bank statement.
Item No. 2 – Outstanding checks were: No. 1234-P2,652.00; No. 1235-P6,557.00;
No. 1236-P6,095.00.
Item No. 3 – The bank collected a note left for collection amounting to P20,000.00
plus a service charge of P600.00.
Item No. 4-Check No. 1237-P P690.00 was incorrectly charged by the bank as
P960.00
Item No. 5-Check No. 1238-P cleared by the bank with P4,200.00 has been recorded
in the company’s book as P2,400.00. This was for the payment of the creditor’s
account.
Item No. 6-The customer returned the check for NSF, P7,800.00.
Item No. 7-The bank service charges for the month are P1,864.00.
Note: To compute for Balance per Book is: Add Cash Balance and Total Cash Receipts
less the Total Checks Issued

How much is the Balance per Book?_________________

Activity No. 1 Present the Reconciliation per Bank Statement

Activity No. 2 Present the Reconciliation per Company’s Book

 Activity No. 3 Presents the adjusted journal of the computed reconciliation.

WRAP–UP

Let us summarize.

1. Illustrate the reconciliation process.

2. What are the steps in the reconciliation process?
3. How does identified reconciling items affect the preparation of Balance per
Bank and Balance per Book?

VALUING

1. Do you know the reasons why there is an imbalance in our ecosystem?

2. What are their effects on our mother nature?
3. Can you imagine if the company has an unbalanced financial report? How
would it affect the operations of the company?

https://www.youtube.com
 POSTTEST

True or False. Directions: Read and analyze the statement. Write TRUE if the
statement is correct and FALSE if the statement is wrong. Write your answers before
the number.

1. When a fee was charged by the bank for returned check, it is recorded as a
deduction from Book Balance.

2. A deposit in Transit is recorded as an addition to the Bank Balance.

3. When the bank collected a service charge from the company, it is a deduction
from Book Balance.

4. Outstanding checks of the company are recorded as a deduction from the

Bank Balance.

5. Jonathan paid his supplier P12,000.00 in check. His supplier did not encash
the check. The P12,000.00 is to be added from the balance of the bank
statement.
 KEY TO CORRECTION

/ Debit Memo

Checks
/ Outstanding

/ DIT

/ Credit Memo

Charge
/ Bank Service

/ NSF

per Book per Bank Item

Reconciliation Reconciliation Reconciliation
Recap

5. False
5. A
4. False
4. C
3. True 3. C
2. True 2. B
1. True 1. C
POSTTEST PRETEST

REFERENCES
BOOKS
Fok, Atnhony, Wynn Khoo. 2015. A Complete Guide (with Practice) to Principles
of Accounts. pp. 58-59. Fairfield Book Publisher PTE LTD, 2015,
Singapore.

Harina, Ricardo M. College Accounting 1, Rev. Ed. pp. 151-154. National

Book Store, 2007, Mandaluyong City.

Monfero, RP. P., Andres, C. S. Salazar, DR. C., Honorario, C. B.

Fundamentals of Accountancy, Business, and Management 2.
Commission on Higher Education, 2016, Quezon City

WEB
https://www.accountingcoach.com/bank-reconciliation/explanation
https://corporatefinanceinstitute.com/resources/knowledge/accounting/ba
nk-reconciliation/
https://www.youtube.com/watch?v=DYDsJUnilPA