1. Bank Reconciliation

2. Cash Book Bank Statement Reconcile

3. Example The bank columns of Fatima’s cash book for the month of April 2008 are given below. Cash Book (Banks columns only) DateDetailsFo$DateDetailsFo$ 2008 April 1 14 26 28 2008 May 1 Balance J Dhatwani ABC Stores Sales Balance b/d 2 970 420 217 1 460 5 067 2 834 2008 April 10 19 29 30 Purchases B Malukani TeeDee Co. Dobhal Ltd Balancec/d 234 110 1 372 517 2834 5 067

4. Fatima’s bank statement for the month of April 2008 is given below. REGIONAL BANK LTD West District Account: Fatima GoyalAccount No: 987654 Date: 30 April 2008 DateDetailsDebitCreditBalance 2008 April 1 13 19 20 24 30 Balance Cheque No. 2388 Credit No. 6983 Credit Transfer (Dividend) Cheque No. 2389 Bank Charges $ 243 110 95 $ 420 150 $ 2 970 Cr 2 727 Cr 3 147 Cr 3 297 Cr 3 187 Cr 3 092 Cr 

5. 1) Place a tick (  ) against the items appearing in both the records. The bank columns of Fatima’s cash book for the month of April 2008 are given below. Cash Book (Banks columns only) DateDetailsFo$DateDetailsFo$ 2008 April 1 14 26 28 2008 May 1 Balance J Dhatwani ABC Stores Sales Balance b/d 2 970 420 217 1 460 5 067 2 834 2008 April 10 19 29 30 Purchases B Malukani TeeDee Co. Dobhal Ltd Balancec/d 234 110 1 372 517 2834 5 067   

6. 1) Place a tick (  ) against the items appearing in both the records. Fatima’s bank statement for the month of April 2008 is given below. REGIONAL BANK LTD West District Account: Fatima GoyalAccount No: 987654 Date: 30 April 2008 DateDetailsDebitCreditBalance 2008 April 1 13 19 20 24 30 Balance Cheque No. 2388 Credit No. 6983 Credit Transfer (Dividend) Cheque No. 2389 Bank Charges $ 243 110 95 $ 420 150 $ 2 970 Cr 2 727 Cr 3 147 Cr 3 297 Cr 3 187 Cr 3 092 Cr   

7. 2) Make corrections to items which do not have ticks a)Cash Book Update Cash Book (Banks columns only) DateDetailsFo$DateDetailsFo$ 2008 May 1 2008 May 1 Balance Dividend Balance b/d 2 834 150 5 067 2 880 2008 May 1Correction of error Bank Charges Balancec/d 9 95 2 880 5 067

8. 2) Make corrections to items which do not have ticks (b)Bank Statement Update (Bank Reconciliation Statement) Fatima Bank Reconciliation Statement at 30 April 2008 $ Balance shown on bank statement 3 092 Add: Amounts not yet credited:- ABC Stores 217 - Sales1 460 1 677 4 769 Less:Cheques not yet presented:- TeeDee Co.1 372 - Dobhal Ltd. 517(1 889) Balance shown in cash book 2 880

9. Why the Bank Account and the Bank Statement may differ? Reasons Timing Differences Cheques not yet presented Amounts not yet credited Items not yet recorded in CB Bank Charges & Bank Interest Dishonoured Cheque Amounts paid directly into Bank Amounts paid directly by the bank to others Errors Made by the business Made by the bank

10. Advantages of Bank Reconciliation An accurate bank balance is available. Errors in the bank account or in the bank statement can be identified. Assists in discovering fraud and embezzlement Amounts not credited by the bank can be identified Cheques not yet presented can be identified Any “stale” cheques can be identified and written back into the bank account.