Bank Reconciliation
Illustration
Cash Book Bank Statement
Reconcile
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.
Example 1
Cash Book (Banks columns only)
Bank Statement from 1st February 2007 to 28th February 2007
Date Details Fo $ Date Details Fo $2007Feb 1
122026
Mar 1
BalanceSalesMuthuSales
Balance
b/d
b/d
1 115320150400
1 985
1 565
2007Feb 5
1428
K LinPurchasesFu BrosBalance c/d
50200170
1 5651 985
Date Ref. No
Withdrawal Debit
$
DepositCredit
$
Balance$
16
12162526
BalanceChequeDepositChequeDepositDeposit
b/f50
200320
150400
1 1151 0651 3851 1851 3351 735
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 $ Date Details Fo $2007Feb 1
122026
Mar 1
BalanceSalesMuthuSales
Balance
b/d
b/d
1 115320150400
1 985
1 565
2007Feb 5
1428
K LinPurchasesFu BrosBalance c/d
50200170
1 5651 985
Date Ref. No
Withdrawal Debit
$
DepositCredit
$
Balance$
16
12162526
BalanceChequeDepositChequeDepositDeposit
b/f50
200320
150400
1 1151 0651 3851 1851 3351 735
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 $ Date Details Fo $2007Feb 1
122026
Mar 1
BalanceSalesMuthuSales
Balance
b/d
b/d
1 115320150400
1 985
1 565
2007Feb 5
1428
K LinPurchasesFu BrosBalance c/d
50200170
1 5651 985
Date Ref. No
Withdrawal Debit
$
DepositCredit
$
Balance$
16
12162526
BalanceChequeDepositChequeDepositDeposit
b/f50
200320
150400
1 1151 0651 3851 1851 3351 735
Cheque not presented at bank
3) Update the records which are not complete
Bank Reconciliation Statement as at 28 February 2007
Balance shown on Bank Statement 1,735Less: Unpresented cheque – Fu Bros 170Balance per Cash Book 1,565
Why the Bank Account and the Bank Statement may differ?
Reas
ons
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
Example 2
Cash Book (Bank columns only) Dr Cr
Date Details Fo $ Date Details Fo $2007Jun 1
5111526
Jul 1
BalanceSalesPent CoSalesPaul Li
Balance
b/d 2 170220180250160
2 9801 880
2007Jun 8
12182430
SalariesDrawingsK FuRentJohn ZhengBalance c/d
350100150300200
1 8802 980
Example 2 (continued)
Bank Statement
Date Details Dr$
Cr$
Balance$
2007June 1
58
12151620242830
Balance b/fDepositChequeChequeDepositDepositChequeChequeInvestment Co Ltd (Dividends)Bank Charges
350100
150300
10
220
250180
400
2 1702 3902 0401 9402 1902 3702 2201 9202 3202 310
1) Place a tick () against the items appearing in both the records.
Cash Book (Bank columns only) Dr Cr
Date Details Fo $ Date Details Fo $2007Jun 1
5111526
Jul 1
BalanceSalesPent CoSalesPaul Li
Balance
b/d
b/d
2 170220180250160
2 9801 880
2007Jun 8
12182430
SalariesDrawingsK FuRentJohn ZhengBalance c/d
350100150300200
1 8802 980
1) Place a tick () against the itemsappearing in both the records.
Bank Statement
Date Details Dr$
Cr$
Balance$
2007June 1
58
12151620242830
Balance b/fDepositChequeChequeDepositDepositChequeChequeInvestment Co Ltd (Dividends)Bank Charges
350100
150300
10
220
250180
400
2 1702 3902 0401 9402 1902 3702 2201 9202 3202 310
2) Find out the items which do not appeared in both records
Cash Book (Bank columns only) Dr Cr
Date Details Fo $ Date Details Fo $2007Jun 1
5111526
Jul 1
BalanceSalesPent CoSalesPaul Li
Balance
b/d
b/d
2 170220180250160
2 9801 880
2007Jun 8
12182430
SalariesDrawingsK FuRentJohn ZhengBalance c/d
350100150300200
1 8802 980
Cheque not credited on Bank Statement
Cheque not presented at Bank
2) Find out the items which donot appeared in both records
Bank Statement
Date Details Dr$
Cr$
Balance$
2007June 1
58
12151620242830
Balance b/fDepositChequeChequeDepositDepositChequeChequeInvestment Co Ltd (Dividends)Bank Charges
350100
150300
10
220
250180
400
2 1702 3902 0401 9402 1902 3702 2201 9202 3202 310
Entries not found in the Cash Book
3) Update the records which are not complete
Cash Book (Bank columns only)Dr Cr2007June 30 Balance b/d 1 880
Dividends: Investment Co Ltd 400
2 280July 1 Balance b/d
2 270
2007June 30 Bank Charges 10
Balance c/d 2 270
2 280
3) Update the records which are not complete
Bank Reconciliation Statement as at 30 June 2007
Balance shown on Bank Statement 2,310Add: Uncredited cheque: Paul Li 160
2,470Less: Unpresented cheque – John Zheng 200Balance per Cash Book 2,270