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Bank Reconciliation
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Illustration Reconcile Cash Book Bank Statement
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Example 1 Central Industries has the following Cash Book (Bank Columns only) showing a balance of $ 1,565 at the end of February 2007 but its Bank Statement shows a balance of $ 1,735.
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Cash Book (Banks columns only)
Example 1 Cash Book (Banks columns only) Bank Statement from 1st February 2007 to 28th February 2007 Date Details Fo $ 2007 Feb 12 20 26 Mar 1 Balance Sales Muthu b/d 1 115 320 150 400 1 985 1 565 Feb 14 28 K Lin Purchases Fu Bros c/d 50 200 170 Date Ref. No Withdrawal Debit $ Deposit Credit Balance 1 6 12 16 25 26 Cheque b/f 50 200 320 150 400 1 115 1 065 1 385 1 185 1 335 1 735
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1) Place a tick () against the items appearing in both the records.
Cash Book (Banks columns only) Bank Statement from 1st February 2007 to 28th February 2007 Date Details Fo $ 2007 Feb 12 20 26 Mar 1 Balance Sales Muthu b/d 1 115 320 150 400 1 985 1 565 Feb 14 28 K Lin Purchases Fu Bros c/d 50 200 170 Date Ref. No Withdrawal Debit $ Deposit Credit Balance 1 6 12 16 25 26 Cheque b/f 50 200 320 150 400 1 115 1 065 1 385 1 185 1 335 1 735
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2) Find out the items which do not appeared in both records
Cash Book (Banks columns only) Bank Statement from 1st February 2007 to 28th February 2007 Date Details Fo $ 2007 Feb 12 20 26 Mar 1 Balance Sales Muthu b/d 1 115 320 150 400 1 985 1 565 Feb 14 28 K Lin Purchases Fu Bros c/d 50 200 170 Cheque not presented at bank Date Ref. No Withdrawal Debit $ Deposit Credit Balance 1 6 12 16 25 26 Cheque b/f 50 200 320 150 400 1 115 1 065 1 385 1 185 1 335 1 735
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3) Update the records which are not complete
Bank Reconciliation Statement as at 28 February 2007 Balance shown on Bank Statement 1,735 Less: Unpresented cheque – Fu Bros 170 Balance per Cash Book 1,565
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Why the Bank Account and the Bank Statement may differ?
Reasons Withdrawals in the Cash Book not entered on the Bank Statement Deposits in the Cash Book not entered on the Bank Statement Withdrawals on the Bank Statement not entered in the Cash Book Bank Charge Standing Orders Direct Debits Dishonoured Cheque Deposits on the Bank Statement not entered in the Cash Book
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Cash Book (Bank columns only) Dr Cr
Example 2 Cash Book (Bank columns only) Dr Cr Date Details Fo $ 2007 Jun 5 11 15 26 Jul Balance Sales Pent Co Paul Li b/d 2 170 220 180 250 160 2 980 1 880 Jun 8 12 18 24 30 Salaries Drawings K Fu Rent John Zheng c/d 350 100 150 300 200
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Example 2 (continued) Bank Statement Date Details Dr $ Cr Balance 2007
June 5 8 12 15 16 20 24 28 30 Balance b/f Deposit Cheque Investment Co Ltd (Dividends) Bank Charges 350 100 150 300 10 220 250 180 400 2 170 2 390 2 040 1 940 2 190 2 370 2 220 1 920 2 320 2 310
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1) Place a tick () against the items appearing in both the records.
Cash Book (Bank columns only) Dr Cr Date Details Fo $ 2007 Jun 5 11 15 26 Jul Balance Sales Pent Co Paul Li b/d 2 170 220 180 250 160 2 980 1 880 Jun 8 12 18 24 30 Salaries Drawings K Fu Rent John Zheng c/d 350 100 150 300 200
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1) Place a tick () against the items appearing in both the records.
Bank Statement Date Details Dr $ Cr Balance 2007 June 1 5 8 12 15 16 20 24 28 30 Balance b/f Deposit Cheque Investment Co Ltd (Dividends) Bank Charges 350 100 150 300 10 220 250 180 400 2 170 2 390 2 040 1 940 2 190 2 370 2 220 1 920 2 320 2 310
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2) Find out the items which do not appeared in both records
Cash Book (Bank columns only) Dr Cr Date Details Fo $ 2007 Jun 5 11 15 26 Jul Balance Sales Pent Co Paul Li b/d 2 170 220 180 250 160 2 980 1 880 Jun 8 12 18 24 30 Salaries Drawings K Fu Rent John Zheng c/d 350 100 150 300 200 Cheque not credited on Bank Statement Cheque not presented at Bank
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2) Find out the items which do not appeared in both records
Bank Statement Date Details Dr $ Cr Balance 2007 June 1 5 8 12 15 16 20 24 28 30 Balance b/f Deposit Cheque Investment Co Ltd (Dividends) Bank Charges 350 100 150 300 10 220 250 180 400 2 170 2 390 2 040 1 940 2 190 2 370 2 220 1 920 2 320 2 310 Entries not found in the Cash Book
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3) Update the records which are not complete
Cash Book (Bank columns only) Dr Cr 2007 June 30 Balance b/d Dividends: Investment Co Ltd 2 280 July 1 Balance b/d June 30 Bank Charges Balance c/d
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3) Update the records which are not complete
Bank Reconciliation Statement as at 30 June 2007 Balance shown on Bank Statement 2,310 Add: Uncredited cheque: Paul Li 160 2,470 Less: Unpresented cheque – John Zheng 200 Balance per Cash Book 2,270
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