Bank Reconciliation I

By S.
K Chik
Introduction
At each given date, our banker should
send us a statement which shows the
details of our bank transactions during a
particular period and the balance at that
date. We call this statement the bank
statement
Theoretically, our companys bank account

in the cash book column should have the
same transactions and balance as
recorded by the bank statement.
The only difference is that the former is
prepared by our firm while the latter is
done by the banker
However, in practice, the balance from the
bank statement seldom agrees with the
balance from the bank account in the cash
book.
Reasons for differences

1. Bank interest and commission
The banker calculates these charges, the
amount will first appear on the bank
statement and cannot be entered into the
cash book until the statement is received.
2. Uncredited Cheques
Some cheques that we have received but not
yet deposited or deposited but not yet
credited on the bank statement because the
cheques have not been cleared
3. Unpresented Cheques
Cheques issued sent to creditors have been recorded
in the cash book but they have not been presented to
the bank for payment, so the corresponding entry in
the bank statement may not appear until several days
later.
4. Autopay Standing Orders and Direct debits
The banker pays regular amounts on behalf of our
company, this amount paid will first appear on the bank
statement at the appropriate date, but may not have
been entered in the cash book.
5.Credit transfer
Sometimes debtors may not send us the cheques for
settlement but directly deposit money into our bank
account. (e.g. EPS) This amount received will first
appear on the bank statement and cannot be entered
into the cash book until the bank statement is received.
6. Dishonored/ Returned Cheques

7. Errors made by the banker or by the
company
Adjustments
We should adjust the balance of cash
book in order to agree the balance of bank
statement
The difference that cash book has not
been entered the transactions of Bank
interest, Standing orders, Direct debits,
Credit transfer and dishonored Cheques
should be adjusted in Cash book
ITEMS
ENTRIES ALREADY MADE CORRECTION

REQUIRED ON
ON
CASH BOOK
CASH BOOK
BANK
STATEMENT
1. Unpresented
Cheque
Credited
Not yet
entered
None
2. Uncredited
cheque
Debited
Not yet
entered
None
3. Credit
transfer
Not yet
entered
Credited
debit
4. Standing
Order
Not yet
entered
Debited
Credit
5. Bank
Charges
Not yet
entered
Debited
Credit
6. Dishonored
cheque
Debited
returned
Credit
Cash Book
(Bank)
$
20X6
20X6
Jan 25 Balance b/ f
100
28 Sales
200
31 Sales
500
750
Jan 30 Mr. A
50
31 Bal c/ d
700
750
Feb 1
Balance b/ d
Hong
700 Kong Bank LTD.
Gradeplus Co.
Date
Particulars
20X6
Jan 25
Balance b/ f
Bank Statement
Withdrawals
(Dr.)
$
Deposits (Cr.)
Balance
$
$
130 (Cr.)
26
Cheque #901
100 (Cr.)
28
Cash deposit (sales)
30
Cash deposit (Mr. B)
150 270 (Cr.)
31
Standing order - rent
230 (Cr.)
30
20 120 (Cr.)
20X6
Overstate
Jan 25 Balance
b/ f
d $180
28 Sales
31 Sales
750
Cash Book
(Bank) Unpresented
$
20X6
Cheque
100
Jan 30 Mr. A
50
200
700
500
31 Bal c/ d
Uncredited
Cheque
750
Feb 1
Balance b/ d
Understated
Hong
Kong
Bank
LTD.
700
balance of $50
Gradeplus Co.
Date
Particulars
20X6
Jan 25
Bank Statement
Withdrawals
(Dr.)
$
Balance b/ f
26
Cheque #901
28
Cash deposit (sales)
30
Cash deposit (Mr. B)
31
Standing order - rent
Deposits (Cr.)
Unpresented
$
Cheque
(adjusted)
Balance
$
130 (Cr.)
100 (Cr.)
30Credit
transfer
Standing
Order
20 120 (Cr.)
150 270 (Cr.)
230 (Cr.)
Adjustments
Cash Book
(Bank)
$
20X6
20X6
Jan 31 Balance b/ f
31 Credit transfer
31 Understated balance
700
150
Jan 31 Standing Order

31 Bal c/ d
$
40
860
50
900
900
Feb 1
Balance b/ d
860
Bank Reconciliation Statement

as at 31 January 20X6
$
860
Balance as per cash book

Add: Unpresented Cheque
50
910
Less: Uncredited Cheque

Bank error (understated deposit)
Balance as per bank statement
500
180
(680)
230
Instead of commencing with the cash book balance,

the bank reconciliation statement can commence
with the bank statement balance and end with cash
book balance as follows:
as at 31 January 20X6
$
230
Balance as per bank statement

Add: Uncredited Cheque
Bank error (understated deposit)
500
180
680
910
Less: Unpresenited Cheque

Balance as per Cash Book
50
(50)
860
Example:
At the close of business on 28 February 19X9 the cash book of Mr. Chong
showed a balance of $625 in his bank. The figure differed from the bank
balance as shown on his bank statement. The following matters account for
the difference:
(a) On 28 February 19X9 one of his debtors had paid direct to Mr. Chongs
banking account the sum of $42. This transaction had not been entered in the
cash book.
(b) During February 19X9 the bank had allowed Mr. Chong interest amounting to
$54 but this had not yet appeared in the cash book.
(c) Certain cheques drawn by Mr. Chong during February 19X9 had not been
presented for payment by the close of business on 28 February 19X9. These
were for $21, $17. $57 and $61.
(d) A standing order for $75 being one quarters rent had been paid by the bank
on Mr. Chongs behalf but this had not yet been entered in the cash book.
(e) During February 19X9, Mr. Chong had paid into his banking account a
cheque for $44 which he had received from a debtors bank. The appropriate
entry appeared on the bank statement but not in Mr. Chongs cash book.
Required:
Write up the cash book starting with
balance of $625 and draw up the bank
statement but not in Mr. Chongs cash
book.

Bank Reconciliation I

Uploaded by

Copyright:

Available Formats

Bank Reconciliation I

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Bank Reconciliation I

Uploaded by

Copyright:

Available Formats

By S.

Theoretically, our companys bank account

Reasons for differences

6. Dishonored/ Returned Cheques

ENTRIES ALREADY MADE CORRECTION

Cash deposit (sales)

Cash deposit (Mr. B)

150 270 (Cr.)

Standing order - rent

Cash deposit (sales)

Cash deposit (Mr. B)

Standing order - rent

Jan 31 Standing Order

Bank Reconciliation Statement

Balance as per cash book

Less: Uncredited Cheque

Instead of commencing with the cash book balance,

Balance as per bank statement

Less: Unpresenited Cheque

You might also like