1. 1 Cash Book ( Bank Column Only ) 2006 $ $ Aug1Balance b/f 40 Aug11 G.Wong 25 Aug10 K.Chan 60 Aug23 H.Chik 45 Aug31 Balance c/f 30 100 Bank Statement Aug5 Balance b/f 40 Cr. 2006 Dr. Cr. Balance $ $ $ Aug11 G.Wong 25 Aug 10 K.Chan 60 100 Cr. Example 1~ 75 Cr.

2. 2 1. Should the ending balance of the Cash Book and Bank Statement be the same? 2. Why they should be the same? 3. Can you tell me why there is a difference between their ending balances?

3. 3 Timing differences E.g. A receipt of $50 from A.Lee on Aug 28 were credited by the bank on Sept 3 Omissions and Errors E.g. A payment of electricity fee by the bank of $300 was omitted in the Cash Book

4. 4 ( 1 ) Unpresented Cheques Cheques issued by the firm not presented for payment by the bank. Cash Book (Bank) 2005 $ Dec 31 Furniture 100 Bank Statement 2006 Dr. Cr. Balance $ $ $ Jan 10 Furniture 100 100 Dr E.g

5. 5 Deposits entered into the Cash Book but not yet appeared on Bank Statement Cash Book (Bank) 2005 $ Dec 30 Sales 100 Bank Statement 2006 Dr. Cr. Balance $ $ $ Jan 2 Sales 100 100 Cr E.g

6. 6 Payments made directly through the bank Cash Book (Bank) 2006 $ Jan 3 Rates 700 Bank Statement 2005 Dr. Cr. Balance $ $ $ Dec 20 Rates 700 700 Dr E.g

7. 7 Charges for banking services made by the bank for the company Cash Book (Bank) 2006 $ Jan 3 Bank Charges 20 Bank Statement 2005 Dr. Cr. Balance $ $ $ Dec 25 Bank Charges 20 20 Dr E.g

8. 8 Standing instructions from the firm to make regular payments by the bank Cash Book (Bank) 2006 $ Jan 2 subscriptions 300 Bank Statement 2005 Dr. Cr. Balance $ $ $ Dec 10 subscription 300 300 Dr E.g

9. 9 Collection from customers made direct to the bank through the banking system Cash Book (Bank) 2006 $ Jan 2 subscriptions 400 Bank Statement 2005 Dr. Cr. Balance $ $ $ Dec 17 subscription 400 400 Cr E.g

10. 10 Cheque deposited into the bank but returned by the bank marked refer to drawer ( i.e. the drawer fails to pay ) Cash Book (Bank) 2005 $ Dec 7 A.Chan 500 Bank Statement 2005 Dr. Cr. Balance $ $ $ Dec 9 A.Chan 500 500 Cr E.g Dec 11 A.Chan 500 0 (Refer to drawer)

11. 11 Interest received from the bank for deposits or fixed deposits into the bank Cash Book (Bank) 2006 $ Jan 2 Interest received 10 Bank Statement 2005 Dr. Cr. Balance $ $ $ Dec 20 Interest received 10 10 Cr E.g

12. 12 Explain the reasons for differences Identify errors and omissions in the Cash Book and the Bank Statement Make corrections

13. 13 Example 2 Cash Book ( Bank Column Only ) 2006 $2006$ Aug1Balance b/f 40 Aug11 G.Wong 25 Aug10 K.Chan 60 Aug23 H.Chik 45 Aug31 Balance c/f 30 100 Bank Statement Aug 1 Balance b/f 40 Cr. 2006 Dr. Cr. Balance $ $ $ Aug 11 G.Wong 25 75 Cr. Aug 10 K.Chan 60 100 Cr.

14. 14 Bank Reconciliation Statement as at 31 August 2006 Unpresented cheque : H.Chik 45 Balance in hand as per bank statement 75 Balance in hand as per Cash Book 30 Add $ Bank Reconciliation Statement as at 31 August 2006 Less: Unpresented cheque :H.Chik 45 Balance in hand as per Cash Book 30 $ Balance in hand as per Bank Statement 75

15. 15 2008 $ $ Dec26Balance b/f 500 Dec27 Y. Chan 100 Dec28 G.Poon 70 Dec29 C.Cheung 25 Dec 31 A.Tang 230 Dec31 Balance c/f 675 800 Bank Statement Dec 26 Balance b/f 500 Cr. 2008 Dr. Cr. Balance $ $ $ Dec 30 Y. Chan 100 470 Cr. Dec 29 Cheque 70 570 Cr. Exercise1Cash Book Credit Transfer: L.Chung 60 530 Cr. Bank Charges 20 510 Cr.

16. 16 Example 3 Cash Book ( Bank Column Only ) 2006$ $ Aug27 Balance b/f 400 Aug28 W.Wong 55 Aug29 T.Pong 50 Aug30 A.Kong 20 Aug30 G.Lee 110 Aug31 Balance c/f 485 560 Bank Statement Aug 27 Balance b/f 400 Cr. 2006 Dr. Cr. Balance $ $ $ Aug 30 W.Wong 55 395 Cr. Aug 29 Cheque 50 450 Cr. Aug 30 Credit transfer: G.Lau 60 455 Cr. Aug 30 Bank Charges 40 415 Cr.

17. 17 What is the amount difference between the Cash Book and the Bank Statement? Answer : $485-$415=$70

18. 18 Credit Transfer Bank interest Debit Cash Book (since not yet entered in Cash Book) Standing Order/ Direct Debit Bank Charges Dishonoured Cheques Credit Cash Book (since not yet entered in Cash Book)

19. 19 Cash Book 2006 $ Aug 31 Balance b/f 485 Aug 31 Bank charges 40 Aug 31 Credit transfer 60 Aug 31 Balance c/f 505 545 545

20. 20 Bank Reconciliation Statement as at 31 August 2006 $ Balance in hand as per Cash Book 505 Add Unpresented cheque :A.Kong 20 525 Less Uncreditd items 110 Balance in hand as per bank statement 415

21. 21 Bank Reconciliation Statement as at 31 August 2006 $ $ Balance in hand as per Cash Book 485 Add Unpresented cheque :A.Kong 20 Credit transfer : G.Lam 60 80 565 Less Uncredited items : G.Lee 110 Bank charges 40150 Balance in hand as per Bank Statement 415

22. 22 Bank Reconciliation Statement as at 31 August 2006 $ $ Balance in hand as per Bank Statement 415 Add Uncredited items :G.Lee 110 Bank charges 40 150 565 Less Unpresented cheque :A.Kong 20 Credit transfer :A.Lam 60 80 Balance in hand as per Cash Book 485

23. 23 Items Effect on Effect on Adjustment Adjustment Cash Book Bank to Cash to Bank balance Statement Book Statement balance balance Balance Unpresented 1) cheque 2) Uncredited items 3) Direct debits

24. 24 Items Effect on Effect on Adjustment Adjustment Cash Book Bank to Cash to Bank balance Book Statement 4) Bank charges 5) Standing orders 6) Credit transfer/ direct credits balance balance

25. 25 Dishonoured cheque 8) Interest allowed by the bank Items Effect on Effect on Adjustment Adjustment Cash Book Bank to Cash to Bank balance balance balance 7)

26. 26 Bank Overdrafts (Shown by a credit Balance in the Cash Book) Cash Book 2006 $ Nov1 Balance b/f 300 Bank overdraft Bank Statement 2006 Dr Cr Balance $ $ $ Nov1 Balance b/f 300 O/D

27. 27 Example Cash Book 2007 $ Dec 4 A. Ko X 290 Dec 24 N. Ng X 110 Dec 29 M.Ming 110 Dec 31 B.Tam 103 Dec 31 Balance c/d 199 Dec 1 Balance b/f 522 Dec 5 K.Wong 120 Dec 23 D.Fung 50 Dec 29 A.Co 70 Dec 31 Bank Charges 50 812 812 Bank Statement 2007 Dr. Cr. Balance Dec 1 Balance b/f 522 O/D Dec 5 Cheque 290 X 232 O/D K.Wong 120 352 O/D Dec 24 Cheque 110 X 242 O/D Dec 29 M.Ming: Credit Transfer 110 132 O/D Dec 29 A.Co. 70 202 O/D Dec 31 Bank Charges 50 252 O/D $ $ $

28. 28 Answers Bank Reconciliation Statement as at 31 December 2007 Overdraft as per Cash Book 199 $ Less Bank Lodgement not yet entered on Bank Statement 103 302 Add Unpresented Cheque50 252