Chapter 10.1

Bank Reconciliation

• Write the heading

Chapter 10.1

Bank Reconciliation

• Enter the ending balance from the bank statement

Chapter 10.1

Bank Reconciliation

• Determine, record, and total the outstanding cheques

Chapter 10.1

Bank Reconciliation

• When cashed, the outstanding cheques will lower the bank balance

Chapter 10.1

Bank Reconciliation

• Add a late deposit, if one exists

Chapter 10.1

Bank Reconciliation

• Compute the adjusted amount of the bank statement’s balance

Chapter 10.1

Bank Reconciliation

• Record the balance of cash from the company’s ledger account

Chapter 10.1

Bank Reconciliation

• Deduct any “debit memos” discovered on the bank statement

Chapter 10.1

Bank Reconciliation

• Calculate the new cash balance

Chapter 10.1

Bank Reconciliation

• Often, these two amounts will agree. If not, look for credit memos and errors.

Chapter 10.1

Bank Reconciliation

• In this case, a journalizing error was discovered. It had the effect of increasing the ledger balance of cash

Chapter 10.1

Bank Reconciliation

• Calculate the adjusted ledger account balance of cash

Chapter 10.1

Bank Reconciliation

• Making changes on this statement will not affect the company’s ledger account balance of $1121.76

Chapter 10.1

Bank Reconciliation

• Journal entries are needed to change the company’s ledger account balance from $1,121.76 to $1,118.36.